After flirting with record highs in May – the Dow Jones Industrial Average hit 40,000 for the first time on May 16 and the Nasdaq, 17,000 on May 28 – the stock market has retrenched a bit. Still, Wall Street’s been having a good run, with the S & P 500 up 10% year to date.
Other economic indicators look good. Unemployment has been below 4% for 27 months – although that number doesn’t consider people who’ve stopped looking for work – and inflation is way down but above the Federal Reserve’s 2% sweet spot.
Overall, the United States’ GDP is more than 40% bigger than China’s, its nearest competitor, and more than five times the size of Japan and Germany, the next largest economies.
So why are many so down on the economy when it’s actually been looking up?
It’s one of the questions we’ve asked some experts, along with their game plans for navigating the economic disconnect:
A conversation with Ella T. Newman, MBA, Norton Advisory Group
Ella T. Newman has been a financial professional for more than 35 years, bringing her experience in business development and as a financial adviser to her private client role at Manhattan’s Norton Advisory Group, a member of PH Robb Legacy Alliance. There she helps craft insurance-related strategies for retirement and estate and business-succession planning.
The Litchfield County resident was formerly a managing director with Fiduciary Trust Co. International, senior vice president and relationship manager in private banking wealth management at BNY Mellon, a manager with Fleet Bank and an investment officer with Bankers Trust Co.
Ella, why is there a disconnect between the actual economy and how people feel about it?
“Despite the public’s fear of a recession, the Dow is up 40% since its post-pandemic low. The consumer is still worried about inflation currently at about 3.36% versus 9.56% in 2022. The historic rate from 1914 to 2024 is 3.30%. As you can see, inflation is at a very reasonable level. Unemployment is at 3.9 %, which is considered nominal, with 175,000 new jobs created in April. (President Joe) Biden has added 15 million jobs through April 2024 during his administration. The President also got the CHIPS and Science Act passed in August 2022, resulting in chips being produced in this country rather than abroad.
“But people are worried about high interest rates on mortgages, which have started to come down and are way lower than historic highs, and credit card rates, which are always high. Those people who still have to maintain two jobs and are seeing consumer prices at the grocery store go up are concerned, too, and they most likely do not have investments in stocks, so the market and the indexes doing well does not soothe their daily concerns.”
What do you think needs to be done to improve either the economic picture or people’s view of the economic picture?
“The economy is doing very well, as mentioned. Biden’s infrastructure bill has created many new jobs. His curb on the cost of insulin and chastising the drug companies pricing and pushing them to lower drug costs impacts many people though they may not realize it. The stabilization of fuel prices helps. There needs to be more information fed to the public about all the positives in the economy that ultimately will impact them.”
With an up market and yet a volatile political situation, what should investors be doing right now?
“They should continue to maintain a diversified investment portfolio that is in line with their risk tolerance. Should they want to reduce their market risk, they can consider an insurance product that is invested to mirror market performance but has a guarantee that does not allow investments to go below a 0% floor. There is also an upside ceiling that varies with the policy you choose. It is important to work with a professional whom you trust to guide you correctly.”
You do a lot of work with women’s groups. For a long time, women had no access to capital and yet they are now poised to control the vast majority of personal wealth in this country. What challenges lie ahead for women in finance and women investors?
“Funding or access to capital has always been a concern for women. Fortunately, there are a number of women’s groups in our area and around the country that have focused on helping women obtain capital for business ventures and provide ongoing support. As a former banker with the Bank of New York Mellon, I assisted women in securing lines of credit and loans. I enjoy educating women about understanding how to increase the size of their assets, protect them and use them effectively to achieve their goals. Women must take an active role in their financial picture. They need to learn how to be vigilant. There are women who have determined how to be enormously successful. They should be used as role models. Seeing their success provides further incentive for women to understand they can surround themselves with the right support to achieve more.”
Ella, tell us a little more about yourself. Did you grow up in this area, and were you always interested in finance?
“I grew up in the Bronx, including in Riverdale, and was the daughter of immigrants who survived World War II in Europe. I came to this country when I was 2. When I was raising my family (two sons), we lived in Chappaqua and resided in Manhattan and Connecticut after our sons had moved on. I majored in economics at City College and got my first job in a management training program with a major bank right after I graduated and then completed my MBA at Baruch College in the evenings. I always had a strong interest in numbers and then finance. I really enjoy the arts as well and have found opportunities to support all my interests.”
You like to paint and are active in nonprofits. As you probably know, some social service nonprofits are taking a hit under new Congressional regulations. What can the financial sector do to make up the difference in government funding?
“I believe wealthy corporate organizations and individuals who have created foundations need to take up the slack in supporting nonprofits that provide for those in need and require resources to help them survive and flourish. There should also be public funds going to the arts that allow them to exist and grow. We require support for groups that educate people about finance and the arts as well.”
Looking into your crystal ball, what do you see ahead for the market, the economy and for yourself?
“The market hates uncertainty, and since we have recently hit new highs, we should expect to see a correction as the presidential election comes closer. The economy is going to continue to grow. We should see an easing of some prices such as prescription drugs as Biden continues to pressure the pharmaceutical companies. Gas prices should stabilize if things get a bit more settled in the Middle East. As mortgage rates ease, the housing market should become stronger. As people’s wages increase and they can catch up to increased prices, they will begin to feel the economy is improving. The enactment of the Chips and Science Act will also further fuel economic growth.
“For myself, I am working on helping more clients with their ability to improve their future through estate, business succession, retirement and long-term care planning strategies. I am working on a book and on producing a podcast and/or talk show. I plan to continue my painting, and doing Zumba as well as finding time to be with my young grandchildren and traveling with my husband.”
For more, click here. https://www.nortonadvisorygroup.com/ella-t-newman
