An overview of the current national economic picture was offered by Don Weber, investment adviser with Edward D. Jones, at a recent Monett Kiwanis Club.
Weber opened the Edward D. Jones office in Lamar in 1993 and came to Monett in 2000 to succeed Jim Wheeler, who was planning to retire. Weber has a degree from Drury University, where he studied biology, chemistry and physics.
In the past year, much has happened in the economic picture, Weber said. The earthquake and tsunami in Japan plus political instability in Egypt and Libya has not shaken the fundamental stability of the economic markets. The stock market has risen 6 percent in the first quarter of 2011, the strongest showing in years, thanks to strong corporate earnings.
Weber considered the federal government's move to extend the Bush-era tax cuts as a particularly positive move. The government is now buying back billions of dollars of its debt. Buying back Treasury bills could have significant ramifications.
The economy has a great deal of cash in it presently, Weber said. The question becomes whether that money will stay in savings or move back into the market. Eight million jobs were lost in the economic downturn, mostly in manufacturing and the housing construction industry. Although one million have come back, the economic picture remains fragile.
Weber said economic powerhouses like the Federal Reserve Bank will be keeping a close eye on the balance between recovery and inflation. Adjusting interest rates, which at present remain at historic lows, can prompt what happens next.
The next major move will come by the end of July when Congress will have to decide whether or not to raise the national debt ceiling. Weber said if the debt ceiling is not raised, money supplies will tighten and interest rates will be pushed up. At the same time, money managers are concerned about a new round of inflation destabilizing the recovery again.
Growth in U.S. companies has stayed ahead of inflation from 1947 to 2010, Weber said. A big part of business strategy during the latest economic downturn has been getting rid of unnecessary people and reducing costs, thus spiking unemployment rates. Except for 1981, no year from 1955 to 2010 has had unemployment higher than the current rate, which is over 9 percent.
If statistics from past economic downturns bear out, Weber estimated it could take 10 years for unemployment to return to 5 percent. Pressures not seen in past recessions, such as oil selling for $110 a barrel, could make a rebound from the current situation more difficult.
Weber advised individual investors to diversify their portfolios as a safeguard against turbulent economic conditions. Despite the economic turbulence, the United States remains the safest place in the world to invest, he added.
Jim Haston was the program chairman. Kiwanis President Frank Washburn presided at the meeting.
The Monett Kiwanis Club meets at noon on Tuesdays for a meal and a program, usually at Happy House restaurant.