Michael Jeanfreau, MBA
Managing Director and Chief Compliance Officer
Cascadia Wealth Management and Cascadia Advisory Services, LLC
Quoted in CityWire RIA, March 19, 2021
Now that the $1.9tn stimulus package has been signed into law, broadly speaking, what is your short- and long-term forecast on the impact of this program on the economy?
In the short term, both the stimulus and re-openings at the state and local level will have a positive impact on the economy. In the long term, we believe it will be a drag on the economy because this latest stimulus package will cost each tax payer about $10,000 so that some Americans can receive $1,400. Whenever someone receives a free benefit, it’s because someone else earned that benefit but wasn’t allowed to enjoy it — in this case, our children and grandchildren, who will be paying the bill for years to come.
If you had to forecast, when do you think we could see the GDP growth and unemployment, return to pre-pandemic levels?
We don’t think we’ll see GDP growth and unemployment hit pre-pandemic levels in 2021. Too many businesses have been permanently shuttered. Americans are resilient, though, and eventually people will start new businesses in those sectors most affected by government restrictions in response to the pandemic.
Do you agree with Fed Chair Jerome Powell that inflation fears are overblown, and that while inflation will certainly tick up, it will only be transitory — or are you worried that we could see damaging inflation in the long term?
Most financial professionals expected that stimulus efforts in response to the Great Recession would lead to high levels of inflation. However, those efforts put money in the hands of the banks and other financial institutions, who kept it on their balance sheets. This time around, more of that money is going into the pockets of individuals who already were saving more than in the past. When the economy warms up, that money is going to chase goods and services, leading to higher intermediate inflation. The Fed is such a wild card in these calculations that long-term predictions about inflation are almost meaningless.