Welcome Dawn and Market Update from Erik
We are thrilled to announce that Dawn Griffith has joined us as a Client Service Associate. The addition of Dawn to our team supports our commitment and capacity to provide you and your family with the high level of service you deserve.
Dawn joins us with over 23 years’ experience in wealth management operations. She feels clients are like family and should be treated as such. Dawn and her husband, Paul, have been St. Lucie County residents for over thirty years. Her husband, Paul, has devoted his career to law enforcement. Dawn and Paul have three children, with one son serving in the air force and a son and daughter both in college. In her spare time, Dawn and Paul love to travel, go camping, spend time with their family and play with their furry four-legged family member Bodie.
With continued tariff headlines vacillating all over the place, volatile markets, political strife, and discord running rampant, I want to step back and examine the larger context of how we arrived here. Brian Wesbury, Chief Economist of First Trust Advisors, outlined his thoughts on the matter in a recent Monday Morning Outlook titled, Symptoms or Causes. While there is significant polarization on many issues, most of us across the political spectrum would agree for the last 60 years or so, the United States economy has not performed to our expectations and continues to cause problems today (Monday Morning Outlook, March 24, 2025).
Wesbury notes while descriptions and explanations differ, many across the political spectrum would agree we are experiencing economic growth and productivity increases that are too slow, the distribution of income is too skewed toward the wealthy, housing is unaffordable, and there is too little manufacturing in the U.S. (Monday Morning Outlook, March 24, 2025). Liberal and conservative ideologies offer widely disparate solutions. I can find truths within both arguments, though I believe neither constituency is addressing the underlying problem.
According to Wesbury, the left-leaning political viewpoint often focuses on a redistribution of wealth as a solution, blaming corporate greed and capitalism for causing many of the economic ills. Higher tax rates on the wealthy, including regular and investment income, along with a potential wealth tax on unrealized capital gains are often mentioned as tools to create more revenue and fix these tribulations. Then, by redistributing money to the appropriate people and places, the government could cure the economic problems that confront it (Monday Morning Outlook, March 24, 2025).
On much of the political right, there is a different narrative, which was recently expressed in depth by former U.S. Trade Representative, Robert Lighthizer, in an interview with Tucker Carlson. In his telling, the movement toward freer world trade over the past 40 or 50 years, what he calls, “hyper-globalization,” is at the root of many economic and social problems (Monday Morning Outlook, March 24, 2025). I believe this viewpoint is driving force behind the current administration’s tariff policies.
The arguments for globalization have consistently been lower prices for consumers (exporting inflation), increased economic growth, and expanded access to markets for businesses. I would argue many of us with access to educational opportunities, geographically located along the coasts, and the ability to participate in capital market growth/trade have received most of these globalization benefits. However, there are vast areas of our country and population that have faced serious detrimental effects of globalization.
In Lighthizer’s view, as manufacturing went global, the fabric of the U.S. changed. Not only did the U.S. economy slow, but the structure of the country changed. He argues many places have lost their sense of community, compared to the immediate post-World War II era in which rich, poor, and middle class, often lived in the same towns (Monday Morning Outlook, March 24, 2025).
There is some truth in his assertions. Industrial production data shows manufacturing has grown just 4.3% in the past 25 years, which annualizes at 0.2% growth. In some cases, entire industries are uncompetitive without large government contracts, like shipbuilding (Monday Morning Outlook, March 24, 2025). If you resided in a community dependent on industrial production, were unable to capitalize on educational opportunities for different employment, or otherwise not able to benefit from the information economy, you may have been at a significant deficit to those who have been. I wrote position papers during my political economics courses in college expressing my reservations and concerns that the North American Free Trade Agreement (NAFTA) was not a good deal for many Americans. While I wrote those papers in 1997, my opinion has not changed.
In my opinion, neither the left nor right political arguments espousing the benefits of globalization, nor the opposing view of strong tariffs promoting self-sufficiency, deal with the systemic underlying problem and merely are an attempt to treat the symptoms. The true genesis of the issue is the explosive growth, size, and scope of the federal government during the last 60 years. Excluding defense (to understand the impact of the bureaucracy and redistribution) federal government spending was 7% of GDP in the 1950s. That rose to 10% in the 1960s and then 14% in the 1970s. It stabilized between 1980 and 2000 but then started growing again. So far in the 2020s, non-defense government spending has averaged 23% of GDP, more than triple its size in the 1950s (Monday Morning Outlook, March 24, 2025).
Wesbury concluded when you incorporate government spending at all levels (federal, state, and local), along with the cost of regulation, the government is directing more than 50% of all economic output. The larger the government grows, the smaller the private sector becomes as spending continues to outpace growth. Our economic capacity to work on the problems we all are in consensus upon, and agree need to be addressed, is negligible. No wonder saving rates are low, houses are unaffordable, manufacturing has moved, and economic growth rates have stumbled (Monday Morning Outlook, March 24, 2025).
Moving towards protectionism with broad-based tariffs is not a long-term solution to the economic woes we continue to face here in the United States. Websury surmises there is enormous upside potential (long-term, not short-term) if the federal government gets its fiscal house in order and downsizes government spending (Monday Morning Outlook, March 24, 2025). While I acknowledge this is disruptive in the near term, it addresses the problem and not just the symptoms.
I pray we have the political fortitude as a nation to address the true structural problem of the explosive growth of our federal government. If we can successfully negotiate this rather daunting task, I believe our ability to address inequity and provide assistance for our fellow citizens should increase tremendously.
Thank you for your continued trust and confidence. If you have any questions or concerns, or we can be of any assistance, please do not hesitate to reach out to us.
Dawn joins us with over 23 years’ experience in wealth management operations. She feels clients are like family and should be treated as such. Dawn and her husband, Paul, have been St. Lucie County residents for over thirty years. Her husband, Paul, has devoted his career to law enforcement. Dawn and Paul have three children, with one son serving in the air force and a son and daughter both in college. In her spare time, Dawn and Paul love to travel, go camping, spend time with their family and play with their furry four-legged family member Bodie.
With continued tariff headlines vacillating all over the place, volatile markets, political strife, and discord running rampant, I want to step back and examine the larger context of how we arrived here. Brian Wesbury, Chief Economist of First Trust Advisors, outlined his thoughts on the matter in a recent Monday Morning Outlook titled, Symptoms or Causes. While there is significant polarization on many issues, most of us across the political spectrum would agree for the last 60 years or so, the United States economy has not performed to our expectations and continues to cause problems today (Monday Morning Outlook, March 24, 2025).
Wesbury notes while descriptions and explanations differ, many across the political spectrum would agree we are experiencing economic growth and productivity increases that are too slow, the distribution of income is too skewed toward the wealthy, housing is unaffordable, and there is too little manufacturing in the U.S. (Monday Morning Outlook, March 24, 2025). Liberal and conservative ideologies offer widely disparate solutions. I can find truths within both arguments, though I believe neither constituency is addressing the underlying problem.
According to Wesbury, the left-leaning political viewpoint often focuses on a redistribution of wealth as a solution, blaming corporate greed and capitalism for causing many of the economic ills. Higher tax rates on the wealthy, including regular and investment income, along with a potential wealth tax on unrealized capital gains are often mentioned as tools to create more revenue and fix these tribulations. Then, by redistributing money to the appropriate people and places, the government could cure the economic problems that confront it (Monday Morning Outlook, March 24, 2025).
On much of the political right, there is a different narrative, which was recently expressed in depth by former U.S. Trade Representative, Robert Lighthizer, in an interview with Tucker Carlson. In his telling, the movement toward freer world trade over the past 40 or 50 years, what he calls, “hyper-globalization,” is at the root of many economic and social problems (Monday Morning Outlook, March 24, 2025). I believe this viewpoint is driving force behind the current administration’s tariff policies.
The arguments for globalization have consistently been lower prices for consumers (exporting inflation), increased economic growth, and expanded access to markets for businesses. I would argue many of us with access to educational opportunities, geographically located along the coasts, and the ability to participate in capital market growth/trade have received most of these globalization benefits. However, there are vast areas of our country and population that have faced serious detrimental effects of globalization.
In Lighthizer’s view, as manufacturing went global, the fabric of the U.S. changed. Not only did the U.S. economy slow, but the structure of the country changed. He argues many places have lost their sense of community, compared to the immediate post-World War II era in which rich, poor, and middle class, often lived in the same towns (Monday Morning Outlook, March 24, 2025).
There is some truth in his assertions. Industrial production data shows manufacturing has grown just 4.3% in the past 25 years, which annualizes at 0.2% growth. In some cases, entire industries are uncompetitive without large government contracts, like shipbuilding (Monday Morning Outlook, March 24, 2025). If you resided in a community dependent on industrial production, were unable to capitalize on educational opportunities for different employment, or otherwise not able to benefit from the information economy, you may have been at a significant deficit to those who have been. I wrote position papers during my political economics courses in college expressing my reservations and concerns that the North American Free Trade Agreement (NAFTA) was not a good deal for many Americans. While I wrote those papers in 1997, my opinion has not changed.
In my opinion, neither the left nor right political arguments espousing the benefits of globalization, nor the opposing view of strong tariffs promoting self-sufficiency, deal with the systemic underlying problem and merely are an attempt to treat the symptoms. The true genesis of the issue is the explosive growth, size, and scope of the federal government during the last 60 years. Excluding defense (to understand the impact of the bureaucracy and redistribution) federal government spending was 7% of GDP in the 1950s. That rose to 10% in the 1960s and then 14% in the 1970s. It stabilized between 1980 and 2000 but then started growing again. So far in the 2020s, non-defense government spending has averaged 23% of GDP, more than triple its size in the 1950s (Monday Morning Outlook, March 24, 2025).
Wesbury concluded when you incorporate government spending at all levels (federal, state, and local), along with the cost of regulation, the government is directing more than 50% of all economic output. The larger the government grows, the smaller the private sector becomes as spending continues to outpace growth. Our economic capacity to work on the problems we all are in consensus upon, and agree need to be addressed, is negligible. No wonder saving rates are low, houses are unaffordable, manufacturing has moved, and economic growth rates have stumbled (Monday Morning Outlook, March 24, 2025).
Moving towards protectionism with broad-based tariffs is not a long-term solution to the economic woes we continue to face here in the United States. Websury surmises there is enormous upside potential (long-term, not short-term) if the federal government gets its fiscal house in order and downsizes government spending (Monday Morning Outlook, March 24, 2025). While I acknowledge this is disruptive in the near term, it addresses the problem and not just the symptoms.
I pray we have the political fortitude as a nation to address the true structural problem of the explosive growth of our federal government. If we can successfully negotiate this rather daunting task, I believe our ability to address inequity and provide assistance for our fellow citizens should increase tremendously.
Thank you for your continued trust and confidence. If you have any questions or concerns, or we can be of any assistance, please do not hesitate to reach out to us.