At our recent Business of the Year Awards event for Ozaukee Economic Development, we also hosted our Economic Forecast Breakfast. In pairing this with our award ceremony, it gives participants the opportunity to hear from some of the top financial minds in Ozaukee County about what we can expect the next year to look like. This year’s event was moderated by Dr. David Borst, with Paul Westphal and Bill Morse participating as panelists.
Dr. Borst is the retired Dean of the Concordia Business School and a former president of OED. He currently teaches personal finance and economics at Milwaukee Lutheran high school and is the COO of the Family Business Leadership partners, a company that serves family businesses transitioning from one generation to the next. Morse is the Senior Vice President at Stifel Financial, and Westphal is the Senior Vice President at RBC Wealth Management. With this being a consecutive year for Borst, Morse, and Westphal participating in our economic forecast, we wanted to take some time to highlight what they predicted would happen with the economy last year and compare their thoughts with what actually happened with a letter grade. When asked about this, here was their response:
Westphall: “I would give myself a less-than-solid C+. I really got wrong the whole structural inflation piece. I saw that as more inflation caused by supply chain issues. Which I thought would eventually work itself out. In reality what we have come to see is that a lot of the inflation has been on the demand side of the equation. I think that some of that will work itself, and I think maybe are at that infection point because we are starting to see consumers with lower savings rates, so less money in the bank and also higher credit card balances. Perhaps the consumer will run out of cash and credit, and that piece of the equation will come down. But I will say a solid C+.
You also asked about what it will take to bring back the employees. I said higher wages to entice these employees with higher wages, and I thought a lot of the stimulus might wear off. People would come from the sidelines back to employment. We still have a shortage of employees, so it’s going to take more of that, and I think that the normalizing of employment rates are going to take a recession with what is happening with the federal reserve. And lastly, you asked about the government shutdown. At that time, I thought that was just a bunch of political posturing and that the government wouldn’t shut down and it wouldn’t impact our economy. Certainly, that’s what proved to be the case. Congress came through with the spending provision, and things have carried on.”
Morse: “I don’t actually write down projections, but I do know that in late September/early October of last year, I was very positive, so I’m going to give myself a C. Why a C, and why not an F? I’m going to give myself a C because what we saw last year was a big transition from roughly a decade of solid growth stocks to value stocks. We went from an overweight growth to an equal weight between growth. That helped our portfolios a lot.
Then around late November is when the tea leaves clearly started to change. We altered our stance on our portfolios pretty dramatically. We did an overweight to value, and through the first quarter, we actually raised a record amount of cash in our portfolios. So, initially, at this particular event, I was still in a very positive mindset. But we did make the changes that really did help our portfolios stand up better. Not go up, but certainly, stand up better than they would have if we had stayed with the old portfolios.”
We’ll be sharing more information in our next blog about Morse and Westphall’s thoughts on the opportunities that Ozaukee County has regarding employment needs and demands. If you’d like to learn more information about Stifel and RBC Wealth Management, you can follow them and the Family Business Leadership Partners on LinkedIn below:
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