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Understanding the Current Economic Landscape: Insights from Stephanie Roth's Hispanic Wealth Project Webinar
In a recent webinar led by Stephanie Roth, Executive Director and Senior Economist for Global Wealth Management at JPMorgan Chase & Co, key insights were shared regarding the current state of the economy and its future trajectory. Roth shed light on the economic goals, the impact of the pandemic, and the demographic trends shaping the labor market.
Economic Goals:
Roth highlighted the Federal Reserve's economic goals, which include lowering inflation to 2% and reducing wage growth to 3.5% These objectives are aimed at maintaining stability in the economy and ensuring sustainable growth.
Where We Were During the Pandemic:
Economists initially predicted a recession due to high levels of inflation. To combat this, the Federal Reserve rapidly increased interest rates. However, this aggressive approach had adverse effects on stocks and bonds, causing the market to suffer.
Where Are We Now:
As the webinar discussed, inflation has now settled around 3%, getting closer to the Federal Reserve's target. Additionally, the U.S. has experienced a 9.6% total return on equity this year. The rise in tech stocks and AI trends played a significant role in boosting the stock market. This upward trajectory in the market can be partially explained by stabilization of inflation. Notably, smaller-cap companies have underperformed, suggesting there may be some catch-up.
Understanding the Current Economic Cycle:
Roth provided insights into the current economic cycle, describing it as a late cycle. This part of the cycle tends to have solid growth, accompanied by increased wages and strong consumer demand for goods and services. Inflation tends to spike during this phase. At this part of the cycle, the Fed tends to be raising interest rates. In late cycle, having a more defensive portfolio makes sense, holding quality companies that are attractively valued and adding fixed income.
Labor Market Conditions:
Roth highlighted the labor market is starting to cool but it remains quite strong. The Federal Reserve aims to slow down the economy to slow down inflation, looking for a moderation in the labor market and small rise in the unemployment rate. Temporary employment layoffs are a sign of cooling but there’s more to go. While wages have seen a slowdown, they still remain quite firm.
Demographic Trends:
JP Morgan's insights indicate that Hispanic labor force participation surpasses that of other demographics and is expected to remain higher in 2024. And consistent across demographic groups, the Hispanic unemployment rate is sitting near historic lows as the labor market rapidly improved post COVID. It may rise some over the coming months, but less so than would be expected following the fastest Fed hiking cycle in decades.
Understanding the economic cycle and its impact on the labor market
Stephanie Roth's webinar provided valuable insights into the current economic landscape. Despite the challenges faced during the pandemic, the economy has shown signs of stabilization, with inflation settling closer to the Federal Reserve's goal. Understanding the economic cycle and its impact on labor market conditions will be crucial in navigating the future. Demographic trends also play a significant role in shaping the labor market, emphasizing the need for inclusive economic policies and initiatives. As we move forward, monitoring these factors and adapting strategies accordingly will be key to fostering a resilient and sustainable economy.
Click here to view the recording of this event. Find upcoming events at hispanicwealthproject.org/events.
Economic Goals:
Roth highlighted the Federal Reserve's economic goals, which include lowering inflation to 2% and reducing wage growth to 3.5% These objectives are aimed at maintaining stability in the economy and ensuring sustainable growth.
Where We Were During the Pandemic:
Economists initially predicted a recession due to high levels of inflation. To combat this, the Federal Reserve rapidly increased interest rates. However, this aggressive approach had adverse effects on stocks and bonds, causing the market to suffer.
Where Are We Now:
As the webinar discussed, inflation has now settled around 3%, getting closer to the Federal Reserve's target. Additionally, the U.S. has experienced a 9.6% total return on equity this year. The rise in tech stocks and AI trends played a significant role in boosting the stock market. This upward trajectory in the market can be partially explained by stabilization of inflation. Notably, smaller-cap companies have underperformed, suggesting there may be some catch-up.
Understanding the Current Economic Cycle:
Roth provided insights into the current economic cycle, describing it as a late cycle. This part of the cycle tends to have solid growth, accompanied by increased wages and strong consumer demand for goods and services. Inflation tends to spike during this phase. At this part of the cycle, the Fed tends to be raising interest rates. In late cycle, having a more defensive portfolio makes sense, holding quality companies that are attractively valued and adding fixed income.
Labor Market Conditions:
Roth highlighted the labor market is starting to cool but it remains quite strong. The Federal Reserve aims to slow down the economy to slow down inflation, looking for a moderation in the labor market and small rise in the unemployment rate. Temporary employment layoffs are a sign of cooling but there’s more to go. While wages have seen a slowdown, they still remain quite firm.
Demographic Trends:
JP Morgan's insights indicate that Hispanic labor force participation surpasses that of other demographics and is expected to remain higher in 2024. And consistent across demographic groups, the Hispanic unemployment rate is sitting near historic lows as the labor market rapidly improved post COVID. It may rise some over the coming months, but less so than would be expected following the fastest Fed hiking cycle in decades.
Understanding the economic cycle and its impact on the labor market
Stephanie Roth's webinar provided valuable insights into the current economic landscape. Despite the challenges faced during the pandemic, the economy has shown signs of stabilization, with inflation settling closer to the Federal Reserve's goal. Understanding the economic cycle and its impact on labor market conditions will be crucial in navigating the future. Demographic trends also play a significant role in shaping the labor market, emphasizing the need for inclusive economic policies and initiatives. As we move forward, monitoring these factors and adapting strategies accordingly will be key to fostering a resilient and sustainable economy.
Click here to view the recording of this event. Find upcoming events at hispanicwealthproject.org/events.
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