Former President Harry Truman once famously asked to be sent a one-armed economist, having grown tired of advisors proclaiming “On the one hand, this” and “On the other hand, that.”
Admittedly, Bruce Bittles, chief investment officer of Milwaukee-based Robert W. Baird & Co. Inc., has two hands. At the company’s recent Lifestyle Conference for clients from across the nation at the Wisconsin Center, Bittles offered investors some advice about the yin and the yang of the global economic outlook.
Here are some of Bittles’ observations for investors:
- In the past decade, the United States has become the largest producer of natural gas and oil in the world. “We don’t need them anymore,” Bittles said of the OPEC nations which for decades held the United States as an energy hostage of sorts. “Think about how important that is (for America’s future),” he said. “I believe it’s the most important economic development in our lifetime.”
- The outlook for inflation is weak, regrettably because wages have remained flat. Household incomes have not kept pace with inflation. “That, in my opinion, is a real catastrophe,” Bittles said.
- The U.S. dollar will remain strong “because our economy is the strongest in the world…Where else are you going to put your money? I do believe the best opportunities (for investment) are in our own backyard.”
- The number of unemployment claims continues to decline, and the skilled labor shortage has become a real problem.
- “The only way you can build a (strong) economy is to encourage savings and investments,” Bittles said.
- The bracket of people age 65 and above is the fastest-growing segment of the nation’s population. “Ten thousand people apply for Social Security every day,” Bittles said. At some point, the federal government will need to raise the retirement age to 70 to sustain Social Security and Medicare, he said. “People are working longer, they’re living longer anyway.”
- Hopefully, the world will be primarily powered by renewable energy in the next 10 to 20 years, making way for a cleaner and healthier planet, Bittles said.
- The gap between the “haves” and the “have nots” has widened to historical proportions, endangering the American middle class, he said. “It’s terrible. It’s the worst thing that can happen to a society,” Bittles said.
A few days after the conference, the Dow Jones Industrial Average tumbled by more than 325 points, kicking off another classic turbulent October for the stock market. Bittles issued assurances for investors to stay the course.
“Volatility has returned to the stock market in October. Historically, high levels of volatility are bullish because it indicates fear; low levels of volatility are considered a negative because it is an indication of investor complacency,” he said. “Also encouraging is that the stock market seasonals will turn positive near the end of the month and become a significant tailwind beginning in November.”