fbpx Skip to main navigation Skip to content

Stagflation?: Hardly a day goes by without a headline or mention of the growing risk of recession. Consumers around the world feel the pain of higher prices. In the U.S., the Consumer Price Index (CPI) has risen at some of the fastest rates since the early 1980s. Historically, high bouts of inflation are quickly followed by recessions and widespread job losses. This “stagflation” is what occurred in the 1970s and early 1980s—a difficult mix of double-digit inflation, declining economic activity, and high underemployment. We do, however, only have 2 of the key ingredients. The U.S. labor market is on a tear that shows few signs of slowing. The baseline expectation is that we’re headed for a recession in 2023. This would likely entail inflation falling but remaining above 3% and short-term interest rates landing around 4%. While that’s no soft landing, it’s also not stagflation. Recessions aren’t pleasant and often leave markets in continued volatility. However, with a strong labor market, we may fare better than some anticipate. As we’ve said before, we’re not into predicting precisely what’s coming—it’s simply not possible. We are, however, committed to long-term planning to help you realize your financial goals—especially through turbulent times like these.

Effective Entrepreneurs: If you’re knee-deep in the parenting world and wondering if your kids will “make something of themselves,” consider these reinforcements. Writer Margot Machol Bisnow interviewed 70 parents of highly successful adults. To her surprise, the diverse group of parents—of races, religions, socioeconomic brackets, and education—all gave their kids similar messages each day:

  • “I can’t do everything for you.”
    When Robert Stephens, a former executive at Best Buy, was three years old, he took off all the doorknobs in the house. “My parents weren’t angry, they just told me I had to put them all back,” he said. Stephens became the “fix-it” guy in his family. Then, at 24, he started Geek Squad, a repair company that he later sold for $3 million.
  • “Do your best and be kind.”
    In 2006, Blake Mycoskie founded TOMS, which has given away over 95 million pairs of shoes. His company introduced the “one-for-one” business model, in which one needed item is given away for each item purchased. It was always Mycoskie’s family policy growing up to help those less fortunate.
  • “If something doesn’t work out, don’t be sad. It may turn out to be a good thing later on.”
    Future entrepreneurs need to learn to win and lose gracefully and not obsess over mistakes. Jonathan Neman tried to start several businesses in college. None of them took off. He did, however, learn about what worked and what didn’t. After college, he and his friends co-founded Sweetgreen, which now has 900 locations across the country. “Even if my dad didn’t think something was a good idea, he supported me,” Neman said. “We fail, we try and try again, we fail, we try and try and try.”
  • “I love you.”
    All those interviewed were clear that they knew how much their family loved them. I Am That Girl founder, Alexis Jones, said, “My mom set this expectation for the household: We love each other unconditionally—these are your people. We always have each other’s back. It made me feel like nothing was impossible.”

Business Briefing

  • FedEx Shares Plunge: In premarket trading on Friday, FedEx shares fell 19%. Its quarterly revenue fell below expectations as its package deliveries declined worldwide. CEO Raj Subramaniam announced several moves to cut costs. They are anticipated to share quarterly results reports this week and are considered a bellwether of the global economy. The withdrawal of its previous forecast jolted markets. (The Wall Street Journal, Reuters)
  • Patagonia’s Unlikely Shareholder: Patagonia founder Yvon Chouinard, 83, announced Wednesday that he is transferring ownership of the $3 billion outdoor-apparel company to a trust and nonprofit organization to fight climate change and protect unspoiled land. Chouinard and his family are giving 100 percent of the company’s voting stock to the Patagonia Purpose Trust and 100 percent of its nonvoting stock to the Holdfast Collective, a nonprofit dedicated to “fighting the environmental crisis and defending nature.” In a letter posted on the company’s website, Chouinard wrote, “Earth is now our only shareholder.” (Marketwatch, The Washington Post)
  • Mortgage Rates: Mortgage applications dropped 1.2 percent last week, falling to the lowest level in 22 years, according to the Mortgage Banker’s Association index released Wednesday. A weakening demand came as the 30-year fixed mortgage rose above 6 percent. (CNBC)

Try not to Smile: Known for its inflight mischief, Southwest Airlines outdid themselves this week on a flight to Honolulu. After boarding the plane in Long Beach, California, unsuspecting flyers found a ukulele waiting on their seat. Passengers learned that Guitar Center was behind the stunt, which included instructors onboard to give free lessons. The ukulele is arguably the world’s happiest instrument and one of the easiest to learn to play. Passengers learned to play a song from start to finish during the flight, unified, one chord at a time. Watch the video here, and just try not to smile!