by
Catalyst Corporate | Oct 24, 2023
Catalyst’s 2023 Economic & Payments Forum is over and we’re still reflecting on the positivity Peter Ricchiuti professed about the economy. Ricchiuti, the kickoff speaker at this year’s Forum, is a professor at Tulane University’s Freeman School of Business.
In a market environment that is currently portrayed in a negative light, Ricchiuti attempted to usher a wave of positivity over the Forum, prompted by what he’s seeing in the markets.
Ricchiuti listed four major reasons we should be more optimistic about the economy:
1. Extraordinarily low unemployment
Though rates are rising, people are still employed.
“The truth is the economy is very healthy. They [the Federal Reserve] keep raising rates and raising rates, and they just can’t kill it.”
Despite the pressure of inflation and higher rates, people are generally staying employed due to the labor shortage, meaning the pressures remain, but they aren’t overwhelming.
2. The long-term trend of the economy
“We have strong household and corporate balance sheets, supported by 15 years of appreciation. This is not 2007-08. At that point, we were hugely leveraged, and we’re not that leveraged anymore,” said Ricchiuti.
The economy seems to have learned something from the financial crisis, and we’re not in the same position now, meaning the stressors shouldn’t have toppling power or threaten to bring the whole thing down. We’re not that heavy to begin with.
“It [the economy] just keeps going up. And the reason is that it’s driven by corporate profits, and corporate profits keep going up,” Ricchiuti added.
Everyone is in the business of growing the economy, and according to Ricchiuti, the long-term outlook is predominantly positive.
3. The next generation is great
People often worry about the next generation of employees as they begin to look toward retirement, but Ricchiuti, as an educator, is incredibly positive about transitioning the country into the upcoming generation’s hands.
“This next generation really does care deeply. They are incredibly smart, and they want to make the world a better place.”
“The reason I’m so positive is because I get to work with these kids. They are smarter, more community minded. The women are much more educated than the men now, and they’re starting families later.” Despite the lower population entering the workforce, this generation is eager and willing to participate wholeheartedly.
4. Things are getting better for most of us.
“The babies born today in America are the luckiest crop in history. Warren Buffet said that. The average American today has better access to transportation, entertainment, communications and medical devices.”
Looking at long-term trends, things are generally improving. “The one word I always say to stick my point is ‘dentistry.’ Everyone my age immediately knows how long a way we’ve come after that.”
It isn’t all positive, though
A major metric the country needs to pay attention to is the population. The population is shrinking as Baby Boomers retire, and the number of incoming professionals does not make up the difference.
“Both sides [political parties] really need to come up with an immigration plan that works. You can’t just let everybody in, and you can’t just keep everybody out. If you look at Japan, Italy and China, you see that growing economies just contract when they don’t have enough working-age people.”
Not only is the working population shrinking in the U.S., but the current economy is also profoundly influenced by immigrants.
“Over 40% of the Fortune 500 companies were started by immigrants; at Intel’s annual science talent search, less than 20% of the applicants were born in the U.S.; and now, 25% of the nation’s physicians are foreign born,” added Ricchiuti.
Are you interested in rewatching the 2023 Economic & Payments Forum sessions? Registrants for this year’s event can watch sessions on-demand.
It’s easier to be positive about the economy when you are safely leveraged and diversified. To explore options for managing your balance sheet, contact a Catalyst advisor today.