Sept. 13 was the worst day of the year for the overall U.S. equity markets, marking another bleak milestone on the nation’s current economic path.
The U.S. is likely on a long road toward financial recovery with most anticipating a recession on the horizon, but the news is not all bad, said David Spika, chief investment officer at GuideStone Financial Resources.
“Recessions are a normal and healthy part of the economic cycle,” Spika said.
The national economy usually experiences some form of a recession every five to seven years, but there hasn’t been one since 2008, he said.
“We haven’t had [a recession] in 14 years,” he said. “That means we’re overdue.”
‘When’ not ‘if’
A recent CNBC survey of CFOs found a majority (68%) of respondents believe a recession will occur during the first half of 2023. None of the CFOs surveyed believe the U.S. economy will avoid a recession in 2023.
Spika agrees.
“We believe the likelihood of a recession in the U.S. is more of a question of ‘when’ than ‘if,’” Spika told The Alabama Baptist.
The last several years of fiscal and monetary policy have resulted in excessive growth and several imbalances in the economy, Spika said, citing issues such as “runaway inflation, a too-tight labor market and exorbitant housing prices.”
Healthy cycle
Though the outlook might be bleak in the short term, Spika believes the current financial cycle is healthy and needed for future growth.
“Historically, the most effective ‘pruning’ of excessive economic growth occurs during a recession, which slows consumer demand and reduces inflation and other imbalances to a more tolerable level,” he said.
As long as the recession is a minor one, it will “put us in much better shape for the future,” Spika said.
What does this outlook mean for U.S. consumers, who are stressed by the environment and don’t have the cash needed to meet all of their needs?
“It’s a good time to practice some financial prudence,” Spika told Baptist Press, adding that he encourages consumers to be cautious when spending money on big ticket items.
People should be asking if they really need a new TV or car before purchasing things that might not be needed.
And for those worried about their retirement funds or other investments, Spika cautions against allowing dramatic headlines to prompt impulsive decisions, even as the news of the day can appear alarming.
Positive outlook
Investors should appreciate how a recession can have a positive long-term impact on the economy and markets, Spika told TAB.
“Despite the pain felt leading up to and during a recession, the economy is in a better position afterward to produce normalized economic growth,” he said.
“Ultimately, making investment decisions based on a disciplined, long-term strategy and not as a reaction to headlines is the key to riding out times of economic uncertainty.”
Young adults, including Christians, have complicated relationship with money
When it comes to financial decisions, Christian young adults are influenced by their faith, but giving is the main area where they differ from their secular counterparts.
An AdelFi study conducted by Lifeway Research found that having a Christian worldview impacts the way young adults (ages 25–40) manage their money.
Nearly half of young adults surveyed said their parents influence their financial decisions. But they are also frequently influenced by their friends, financial publications or websites and financial advisors.
Just over one-third of young adults agree their religious faith influences their financial decisions. But exactly how one’s faith impacts the way they manage money varies.
The typical Christian young adult donates more than three times as much as a non-Christian over the course of a year ($1,820 vs. $556).
This is aided by the fact that more Christians give to a local church and religious organizations than non-Christians do.
“Christians are much more active in donating their finances and no less active in trying to do good with their spending,” said Scott McConnell, executive director of Lifeway Research.
When it comes to spending, just under half of Christian young adults agree Christians have a responsibility to try to spend their money with companies that are owned or operated by Christians.
Making a difference
“Young adults are very conscious about trying to make a difference in society with their purchases,” said McConnell.
“Christian young adults are no exception. Most of them approach spending decisions with a desire to honor Christ and to be good stewards of their finances all while seeking to do business with companies that help others.” (Lifeway Research)
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