August 24, 2017

Northwest FCS News

One of the elements I enjoy most about my travels is moderating panel discussions at various schools and seminars. Recently, at the Graduate School of Banking at University of Colorado, I had the pleasure of moderating a panel of academic and industry practitioners ranging from CEOs to bank consultants. This group provided a lively discussion with the bankers in attendance, as well as an interesting perspective on possible economic trends. Let’s take a look at some of the highlights. 

Drawn-out recovery
Today, the U.S. economy is in its 96th month of recovery since the great recession. Economic growth has been inhibited and under 2 percent for most of the recovery. This is the result of more intense regulation, taxation policies, overwhelming student debt and more conservative investing habits by the baby boomers. Interestingly, several on the panel noted that if the current Administration cannot carry out some of its economic initiatives, we could be headed for another recession. As one panelist said, “It could be the ‘Trump bump’ followed by the ‘Trump thump!’”

Stock market
When asked at what level the stock market would be in July 2018, the panelists’ answers varied. Most indicated the Dow would be within 10 percent (up or down) of today’s level. However, one panelist shocked the hundreds of bankers in attendance stating that his investments were 100 percent in cash because he believed the Dow would be 12,000 to 13,000 by next July. While surprising, this individual also sat on the panel in 2008 when he predicted the great recession and housing crisis. Of course, his predictions turned out to be completely accurate, but only time will tell if his track holds.

The panel named six bubbles in today’s economy: energy, automobile, student debt and loans, stock market, multifamily housing and urban redevelopment. Interestingly enough, agriculture was not included in the list, which if accurate is a piece of good news. 

As we wrapped up the panel session, each panelist was asked to offer one piece advice to the bankers in attendance. Their counsel included these phrases:

“Invest in what you know.”
“Take chances while you’re young.”
“Surround yourself with good people.”
“Direct your personal ship toward your passion.”

In closing, one panelist pointed out that, especially in today’s economic environment, people tend to get too focused on the numbers. Actually, it’s the factors outside the numbers that make the most accurate predictors of where the numbers will ultimately land.