Financial Focus: The Fed believes a second half rebound is very possible- with caution

Financial Focus: The Fed believes a second half rebound is very possible- with caution

By: Professor Anthony Rivieccio MBA PFA

On Sunday May 17th, the TV show  60 minutes , interviewed Jerome Powell , Chairman of Federal Reserve Board

The Fed is a Governmental body in charge of interest rates and money in our economy

Trump , wanting a new person in charge of The Fed, nominated him in 2018, ,but , since then, has been critical of his work. Trump has been pushing hard to lower interest rates further while Mr Powell wanted to take a more moderate approach 

And then in February of 2020, the pandamic came. 

Mr Powell said in the interview this week that ” The pandamic is the biggest threat to the economy and a long recession”.

When Mr Powell gave a speech on the economy recently, The Dow Jones went down 500 points.When asked in the interview which economic metrics he is using to measure the economy, Powell said, “Medical metrics are more important than economic metrics. One has to do with the other “.

While Congress was creating Stimulas policy The Fed passed $3 trillion to assist Banks & Businesses. 

Mr Powell said last week, ” The real risk is if people are out of work for a long time, people’s careers could be lost.They can become insolvent”.

Mr Powell believes however that the economy is geared for a 2nd half comeback but full momentum not till next year

Mr Powell said, ” Congress must keep businesses solvent.You would not want to bet against the US Economy, To fully recover, a vaccine is needed.Lots of things we can move ahead and open but some like sporting events and concerts will be challanged.

2nd quarter GDP ( Gross Domestic Product) will shrink by 30%

and unemployment will be 25%”

So was this the same as the 1929 Great Depression or the 2009 financial housing collapse?.

Mr Powell said ” We had a healthy economy two months ago so the downturn will be hard but moderate growth will start in the 3rd quarter.Lowest paid people ,making $40,000 or more, have the most to lose “.

As we go into the summer , all States should be ” open” in some capacity.

While we believe Mr Powell’s  statements might shake up some of the global economy, we also believe he has been very accurate in his thought process.

For example, remember before the pandamic, unemployment was at 4.5%.

Based on Mr Powell’s thinking it will take massive spending on all elements on our economy to bring the current projected rate of Mr Powell (25%) to come back to pre pandamic levels.

We do believe however that between The Fed and Congress , much stimulas has been put in place to ” restart” our economy again as our United States attempts to reopen.

So if your in the stock market, hold tight and get ready for a 2nd half rebound.

Professor Anthony Rivieccio, MBA PFA, is the founder and CEO of The Financial Advisors Group, celebrating its 24th year as a fee-only financial planning firm specializing in solving one’s financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Kiplinger’s Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Co-Op City News, The Bronx News, and The Bronx Chronicle. Mr.  Rivieccio also pens a financial article called “Money Talk”. Anthony is also currently an Adjunct Professor of Business, Finance & Accounting for both, City University of New York & Monroe College, a Private University. You can reach Anthony at 347.575.5045. 

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