Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money. We’re joined by Nate Kreinbrink, Financial Planner at NelsonCorp Wealth Management.
Welcome back, Nate.
Nate Kreinbrink:
Thanks again for having me.
Brandy Auterson-Hurst:
So it seems like the economy has been quite resilient recently. What’s driving this?
Nate Kreinbrink:
Well, as you can imagine, there’s always a ton of different factors that impact economic growth at any given time. Now, since the pandemic, the Federal Reserve has embraced this idea of a high-pressure economy. Now, in the economic world, essentially what this means is we are letting the economy run a little hotter than what we normally would, to stimulate things like higher productivity and increase labor force participation. And I think we’ve got a chart here that dives into the latter just a little bit more. So what we’re looking at here is the monthly applications for new high-propensity businesses. Essentially those that are likely to hire employees dating back to 2005. So what you can see here lately is that we have surged to new heights following the pandemic and are currently sitting about 30% higher than where we were in 2019. So letting this economy run a little hotter than normal has definitely increased productivity and has really increased the current growth more on a higher average than what we’ve seen over the past 15 years.
Brandy Auterson-Hurst:
Well, that’s good news, but do you think this trend will continue?
Nate Kreinbrink:
Right. So obviously this has been great news as of late, but with inflation cooling off over the past several months, there is some concern that we may see some of these benefits start to diminish. Now with that said, if the Fed can manage a soft landing, essentially cooling the economy off enough to keep inflation low and avoid a recession, we may see some of this new business formations persist. Now, obviously with everything else, we’ll keep an eye on this over the coming months of years as it’ll be a good indicator as where we’re headed in the economy.
Brandy Auterson-Hurst:
All right, Nate, as always, thanks for joining us.
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Indices mentioned are unmanaged and cannot be invested into directly.
This video includes a paid appearance.