Welcome back to FOX EYES on the Hill this Sunday
morning.
You know, for the first time in more than three
years, inflation slowed below 3%.
This comes after the highest inflation numbers that have been
seen in decades.
It is still not clear when or if the Federal
Reserve is going to lower interest rates, which are now
2% but may pave a way for the Fed to
cut rates next month.
Mark Abalone, familiar face here on the Hill.
He's the president of Potomac Wealth Advisors, joins us again
for his perspective.
So this news comes out Mark Wednesday morning that inflation
has dropped again.
Now, we've been hearing these, you know, chatter that Fed
is going to lower interest rates in September.
Does this news from Wednesday make it more likely or
not that that's actually going to happen in September?
And that's a great question.
The answer is it probably helps.
It's still to be determined because the Federal Reserve wants
inflation closer to 2%.
And even though this is good news, 2.9 is still
pretty close to three.
But it but it takes a little pressure off of
them because we had a weaker employment number in July
and the Federal Reserve has a dual mandate to keep
unemployment low and inflation low.
So that's why they may lower it in September.
I've heard dueling explanations of that.
Employment number one, it's the summer, maybe some people are
not out in the job market as as much.
The other is that, you know, when hiring was kind
of at at at a pitch rate that a lot
of those jobs got filled.
Does either one matter?
Does it matter more what the number is or what
the reason is?
Well, there's a lot that goes into the data.
It's not just the unemployment number.
the Fed is looking at a lot.
They're looking at people.
How many people are applying for jobs, they're looking at
wage growth, and they're looking at all of this in
composite.
But basically the labor market is starting to slow and
the Federal Reserve doesn't want to be late.
They don't want to be causing a recession.
So they may lubricate the economy with less expensive money
and lower interest rates.
One of the things we heard over and over and
over again in 2023 was a recession is coming, right?
That it was almost a given.
The governor of Virginia, Glenn Youngkin, was saying it almost
has a certain it didn't happen.
Should we still be on guard for a recession at
this point?
Because, you know, these numbers, while improved, aren't quite what
I think Optimistically people would want to say it would
reflect a strong, healthy economy.
Yeah, you're absolutely right.
the US economy has been super resilient.
The calls were for a slowdown.
The calls were for a recession.
But remember, we have a lot of government spending on
that CHIPS Act, the Infrastructure Act, right?
Those there's been a lot of infrastructure that's happening, and
that creates economic activity.
And you have technology improving efficiencies for companies.
And we've managed to stay competitive.
Earnings have been strong.
And even if we get a recession, not all recessions
are created equally.
It could be a shallow, short recession, painful the for
the people who may be losing their jobs, but it
doesn't look like we're having a deep recession.
One of the things we're also hearing about the economy
right now is that consumer credit levels are astronomical.
A lot of people have been loading up and trying
to get through these hard times economically on credit cards.
How big of a problem is that when you're trying
to assess the health of our economy right now?
If people are racking up credit card bills that they're
either struggling or not able to pay, well, stuff.
Americans are very good at spending.
They enjoy spending, especially in the summer, as you alluded
to earlier.
They want to go to the beach and they want
to enjoy life, especially after COVID.
That's to be expected.
I think the Federal Reserve takes that into consideration and
lower rates will actually help them with their credit card
balances.
We just hope they're not overextending themselves.
Now, you are a financial analyst.
I know you're not a political analyst, but these politicians
are going to go out this fall and say things
about the economy.
So we want to decipher what is true and what
is not.
Donald Trump's been saying the economy is a disaster right
now.
The Democrats have been saying it's in great shape.
Who's telling the truth?
A disaster might be a strong word.
There's pain in some points and there's a lot of
debt.
All that government spending creates debt.
That's not good.
Unemployment's taking up, that's not good.
But look, the stock market's at an all time high
and wage growth has been strong.
So both people at the top and the investor class
as well as workers are doing OK right now.
So I think it's somewhere in the middle.
Mark Abalone is the president of Potomac Wealth Advisors.
Always a pleasure to have you at this couch on
the hill here to kind of give some perspective on
but what's happened and and what's ahead.
Always great, always great to talk to you.