David Diller, Financial Advisor at RBC Wealth Management

Recession Rumors? Not So Fast! The Economy Shows Signs of Strength...

Some of you may remember my post from last Summer discussing the interesting idea of how inflation has fallen sharply due to the consumer having widespread pessimism about the economy regardless of the actual economic situation, aka vibecession.

As you can see from the University of Michigan Index of Consumer Sentiment, the data shows that consumers were more pessimistic in 2022/2023 than ALL four of the past recessions, including the Dot com bubble and the Great Recession. All while unemployment has remained under 4% for the longest period going back to the 1960s!

As you can see from the chart there has been a sharp increase in consumer sentiment in January, because we've finally seen a steady trend of average hourly wages exceeding inflation for 8 straight months.

That brings us to today...

The 2023 Q4 Gross Domestic Product (GPD) report was released, and it far exceeded economic expectations.

As you can see from the second chart, real GDP grew 3.3% from Q3 to Q4. That brings the total average for the year to 2.5%. What's so pessimistic about that!?

Some would then assume that economic strength in consumer spending would mean that inflation is heading higher.

Not so fast! The Federal Reserve's preferred measure of inflation (personal consumption expenditures - PCE) rose at a 2% annual rate in Q4, which is in line with the Fed's target.

Can we call this a soft landing?

While it's too early to declare victory, the Q4 data paints a picture of an economy navigating the current challenges with remarkable resilience. 3% growth amidst rate hikes represents a notable achievement, particularly considering the progress made on the inflation front.

I had so much fun yesterday teaching local 3rd graders about business and finance as a volunteer through Junior Achievement of New Mexico!

Yesterday we were at Bernalillo Elementary School and it was so fun to see the students get excited about , the importance of business to communities, and what it means to be an .

Thanks to the other volunteers who I roped into volunteering with me!

If you're interested in giving back to your community, Junior Achievement is looking for 70 more volunteers next Spring.

Shout out to teachers everywhere! It's exhausting being on your feet and leading lessons all day. Thank you for all you do!

I had a blast volunteering at last weeks 50th annual as a member of the Albuquerque Kiwanis club. The balloon fiesta is the largest fundraiser for the Albuquerque Kiwanis club and let me tell you it's a LOT of work.

Growing up in Albuquerque I've always appreciated the balloon fiesta and now I have an even greater appreciation for the event knowing how much work and volunteer support is needed to coordinate the entire event.

Thank you to all the volunteers from all over Albuquerque who helped sell tickets, scan tickets, run coffee/hot chocolate/snacks to volunteers, finance committee members, and all others involved!

Outside of a few rain cancellations, the 50th anniversary was a huge success!

This week I'm looking forward to sleeping in past 2:15am!