Tuesday, October 08, 2019

Using Buzzwords, Clichés and Corporate-Speak Hurts Your Personal Brand

I had the honor of contributing to a recent Marketing Sherpa series on corporate buzzwords and lazy jargon. Marketing 101: What is baking in?

We all get pressed for time, especially during the crazy Q4 run up to the Holidays. It’s easy to easy to fall back on clichés and corporate buzzwords when you need to send a fast response, fill in the blanks, add a last-minute slide to your presentation or turn in a report or guest article on deadline.

As with any diet or fitness regimen, once you start cheating and cutting corners, you’ll start to lose your edge and there’s almost no turning back.

Take the time to choose your words carefully whether you’re writing for publication, responding to an email or sending a text. Every word counts—it’s all part of your personal brand.

Happy New Year.
Best, HB

#buzzwords #jargon #corporate speak

Tuesday, September 24, 2019

Benefits of Boredom

While researching a book about maximizing productivity, I stumbled across a Business Insider piece entitled: 6 Scientific Benefits of Being Bored. I didn’t think it was relevant at first, but since I was, uhm, “bored,” I decided to read on. Glad I did.

Being hyper-productive and constantly busy is a badge of honor in our always-connected society. But experts say we miss out on a lot if we’re never bored. Why?  Because being bored can lead to some of our most original thoughts. In fact, there are even conferences devoted to boredom, including the International Interdisciplinary Boredom Conference and London’s annual Boring Conference

Before booking your flights to “Mundania,” however, let’s take a look at some of the biggest benefits to being bored occasionally:

1. Boredom can make you more creative.
British psychologist Sandi Mann gave subjects various boring tasks to complete and then asked them to use their creative thinking. The subjects who had the most boring task — reading the phone book — came up with the most interesting uses for plastic cups, which is a standard test of divergent thinking. According to Mann, boredom encourages your mind to wander and helps you unlock more associative and creative ways of thinking. Hmmm.

2. Boredom lets you know when something is off. University of Louisville professor, Andreas Elpidorou, wrote in a psychology journal that boredom is a warning to ourselves that we are not doing what we want to be doing. When channeled properly, however, boredom can be great motivator that incents us to switch goals and projects, Elpidorou concluded.

3. Boredom makes you more goal oriented.
In a process known as "autobiographical planning," a team of European and American researchers found that people most frequently plan and anticipate their future goals while daydreaming.

4. Boredom can make you more productive. Boredom often stimulates a region of the brain that’s responsible for "thought controlling" mechanisms and "thought freeing" activity. Researchers at Bar-Ilan University discovered that daydreaming doesn't harm your ability to succeed at an appointed task, but rather helps it.

Dr. Guy Baker, Ph. D, founder of Wealth Teams Alliance (Irvine, CA) told me recently that a certain amount of repetition is essential for becoming highly skilled in any endeavor. “Being disciplined, following a strategic philosophy and a tactical strategy can be repetitive. But it produces results over the long run. What causes failure is jumping from idea to idea and trying to outguess the market,” Baker added.

5. Boredom can make you a better person. Researchers in Ireland found that when we're bored, we lack perceived meaning in our activities and circumstances. They concluded that this induces us to search elsewhere to re-establish our self-meaning.
“It may appear to an outsider that the lack of change and staying the course is boring, and on some level it is,” explained Baker. “But to stay sharp and to anticipate the big picture and to recognize long term trends that provide opportunities requires one being alert and focused on what is happening around them.” That takes time and repetitive effort.

6. Boredom could be an essential ingredient for happiness. Almost a century before social media and mobile phones came onto the scene, philosopher Bertrand Russell mused on the makings of a happy life. Much of what he concluded is still relevant today.
"A life too full of excitement is an exhausting life, in which continually stronger stimuli are needed to give the thrill that has come to be thought an essential part of pleasure,” wrote Russell.


As Jude Stewart explained in the Atlantic, “In our always-connected world, boredom may be an elusive state, but it is a fertile one. Watch paint dry or water boil, or at least put away your smartphone for a while. You might unlock your next big idea.”

As anyone who has ever run, bicycled or swum for long distances can tell you, one of the best ways to get into a flow state is to engage in a repetitive activity that blocks out all the distractions. I’ve found it even works when mowing the lawn.

#benefits of boredom #flow state  #creativity

Monday, September 16, 2019

Not Your Grandfather's Recession

Our annual CPA/Wealth Advisor Confidence Survey™  shows that almost half of advisors (47%) expect a recession within the next 12 months--up from one third of advisors (33%) who thought so at this time a year ago. 

Now that we have an inverted yield curve on top of escalating trade tensions with China, slowing business investment and waning consumer confidence, it's only natural to feel our 10-year economic win streak will eventually run out. Sure, it’s a record-long period of prosperity, but Australia's economy has gone 28 straight years without a recession. Don’t think we’re on the brink of a contraction just because the actuarial tables suggest it.

As Jeanna Smialek explained in Friday's New York Times, many economists expect growth to weaken slightly over the next couple of years — without actually contracting — "and that distinction is crucial." Federal chair, Jerome Powell, said last week that “the most likely outlook for our economy remains a favorable one with moderate growth,” and “our main expectation is not at all that there will be a recession.” 
Also don't count on a recession call to be made before the 2020 elections--it takes anywhere from six to 20 months for a recession to be officially declared after it starts. According to Smialek, weak GDP growth isn't great news, but it's still counts as growth. That means it shouldn't be mistaken for a recession: 
"While economic growth has moderated only slightly so far, forecasters think America is headed for a deeper pullback. The economy expanded by 2.9 percent in 2018, and economists expect that pace to slow to 2.3 percent in 2019 before falling to 1.8 percent next year, based on the median in a survey by Bloomberg. Several particularly glum forecasters even expect the economy to shrink for one or two quarters in 2020," Smialek explained.

By the way, the U.S. no longer defines a recession as two consecutive quarters of shrinking output, although many economists and the news media use that rule of thumb—myself included.
 Turns out a committee at the National Bureau of Economic Research, made up of eight leadingeconomists, makes the official call on recessions. Apparently, they look at a wide range of data, not just GDP growth, including early indicators, like industrial production and a monthly growth series produced by the firm Macroeconomic Advisers. 
If you're keeping score at home, output growth slowed to a 2.0 percent annual rate in Q2/19 from 3.1 percent earlier in the year. According to early data, that is still a respectable number and consumer spending remains pretty robust. 

According to Smialek, if economic growth drops below its "sustainable level" — approximately 1.75 percent, based on demographic and productivity trends — it could, theoretically lead to higher unemployment and slower wage growth more broadly.

But many experts think it takes an outright recession to cause unemployment to rise across a range of industries in America. "Aside from one mild instance in the mid-1990s," wrote Smialek, "the headline jobless rate has not jumped without an actual downturn in recent business cycles." She said that's partly because a recession becomes far more likely once businesses start cutting jobs. Employers are reluctant to lay off workers until business gets pretty bad, because hiring and training is expensive. Once they are forced to cut their head count and workers start to lose their paychecks, those consumers pull back sharply on spending — making it a surer bet that the economy will shrink in earnest. 

Slow growth could actually cause higher unemployment without turning into a recession. While there’s no precedent for that in the United States, Australia has had several instances of rising unemployment in its 28-year-old economic expansion, without falling into a recession. 

Bottom line: It may come down to perception rather than reality. As my friend Phil Palumbo of UBS Wealth Management likes to say: "If enough people and businesses think we're headed for a recession, it becomes a self-fulfilling prophecy. If enough people think we’re okay, we’ll stay okay.” 
There are opportunities in every market climate and every economic cycle. I am confident that you and your clients to be able to sniff them out. As Warren Buffet always says: "Stocks are the only thing people never buy when they're on sale." Same goes for capital improvements, hiring and R&D. 

#Recession #consumer confidence #wealth advisor confidence

Monday, September 09, 2019

Why Introverts Make Great Leaders (and Advisors)

Last week’s post (What’s Your Charisma Score?) generated a fair amount of feedback as expected. But, let’s be clear about one thing: Being an extrovert is not synonymous with being charismatic. As several of our clients explained to the national media last week, introverts may actually have an advantage and it’s also what makes them excellent advisors.

The power of self reflection

While many charismatic people are extroverts who love the spotlight and get energized by having people around, they can also be afraid to confront their own thoughts. Introverts, by contrast, have the courage to dive deep into their own psyches, knowing that doing so, while painful at time, will only make them stronger.

In just a minute you’ll see why this is important.

“’Broken glass’ days are refreshing and can rejuvenate your mind,” observed Dr. Guy Baker, PhD, Founder of Wealth Teams Alliance (Irvine, CA). “These kinds of days are best done in silence with a pen (not technology). Go to a quiet place. Write down your thoughts and get them out of your head. Everyone needs some time away from noise. Putting your thought on paper makes them real,” added Baker, a recent winner of the insurance industry’s lifetime achievement award.
Matt Topley, Chief Investment Officer of Fortis Wealth (Valley Forge, PA), agreed. “The hardest thing for people to do is to really know themselves; it’s even harder to change themselves.  A lot of the things we blame co-workers for are usually issues within ourselves.  Your success in life is going to be about collaboration and relationships, so understanding psychology will give you an edge in both communicating with others and communicating with yourself,” added Topley, a recent winner of the Philadelphia Inquirer, “Influencer in Finance” award. “This knowledge will let you communicate with empathy and sincerity. Both of these traits are essential for being a successful advisor, but often lacking in today’s always-connected, device-driven society.”

Value of working independently

While working in a team can be invigorating, it’s usually less efficient than working independently, explained Baker. “I like to be able to control my own schedule. I don’t like being second-guessed. I like taking responsibility for my success and for my failure. I learn from my mistakes. If I am on a team, others may make the mistakes, and I have to pay the price. I would rather pay the price for errors when I make them.”

Topley concurred: “While extroverts need people around them all the time in order to feel alive, introverts need time alone from time to time. If you’re an introvert, try breaking up your week into smaller chunks of down-time in which you are 100-percent alone. That way you can focus completely on deep thought and reflection.” 

Listening skills
Whether you’re an introvert or an extrovert it’s very important to think before you speak, observed Baker. “If you’re the type of person who just reacts to what someone has said without processing the information or the consequence of a hasty response; that’s a sign of immaturity and often narcissism. Good listeners are always measured by their reaction to what is said. Poor listeners are so intent on what they want to say, they miss the message.”

Topley agreed with Baker that listening is an art. “You can be a quiet listener or an active listener. When someone else is talking, the key is to be actively listening to what they’re telling you, not thinking about what you are going to say next. A good listener is tuned in to their relationship as opposed to being so interested in what they want to say that they end up missing the speaker’s message.”


If you are introverted, both Baker and Topley say don’t let the personality trait be an impediment to your career growth. “It’s a myth that introverts are not good networkers or effective salespeople,” said Topley. “Some of the best are introverts by nature. Whether you’re an introvert, extrovert or somewhere in between, Topley said you need to get out of your comfort zone on a weekly, if not daily, basis “to meet new people and to experience new situations inside and outside your office.”

Great words of advice, whether you prefer having lunch by yourself or with a gang of co-workers.

#Dr. Guy Baker #Matt Topley #extrovert #introvert #Power of introverts

Saturday, August 31, 2019

What’s Your Charisma Score?

You’re a successful financial advisor. No matter how many degrees and certifications you list after your name, you’re in the people business at the end of the day. Clients gravitate to you because they trust you, they like you and they think you have integrity. That’s why they share so many intimate details of their lives with you—financial and otherwise—that few others know about.

Some of you were class president or football quarterback growing up, while others of you were more comfortable in the bleachers or the chemistry lab. It doesn’t matter if you are an introvert or extrovert by nature, you learned to master your people skills. Chances are, you have a secret ingredient that’s propelled you to the top of a highly competitive profession—CHARISMA!

The word charisma comes from the Greek word (khárisma), which means "favor freely given" or "gift of grace.

When you think of people like Oprah, Madonna, Jay-Z, Bill Clinton, Warren Buffett and Muhammad Ali, you think of dynamic leaders with supreme confidence, exuberance, optimism, expressive body language, and an authentic, friendly smile.

Many believe you’re either born with charisma or you’re not. But Psychology Today among other researchers, argues that charisma is a learned behavior that’s polished and perfected over time.

Perfecting your charisma skills

Many of you have worked hard to perfect your personal story and to enhance your status as thought leaders through writing, speaking and press mentions. That’s great. Don’t stop doing those things. But you also want to perfect your charisma skills.

Olivia Fox Cabane, a charisma coach and the author of the book “The Charisma Myth,” told the New York Times recently that we can boil charismatic behavior down to three key elements: Presence, Power and Warmth.

1. Presence.
This involves being in the moment. If your attention starts to slip while speaking to someone, Cabane says you should refocus by centering yourself. “Pay attention to the sounds in the environment, your breath and the subtle sensations in your body — the tingles that start in your toes and radiate throughout your frame,” she told the Times.

2. Power.
This is about breaking down self-imposed barriers rather than achieving higher status. Cabane believes it’s about lifting the stigma that comes with the success you’ve already earned. “Impostor Syndrome, as it’s known, is the prevalent fear that you’re not worthy of the position you’re in. The higher up the ladder you climb, the more prevalent the feeling becomes,” Cabane added.

3. Warmth
is the third element and it’s harder to fake according to Cabane. “This requires you to radiate a certain kind of vibe that signals kindness and acceptance.” Cabane suggests imagining a person you feel great warmth and affection for, and then focusing on what you enjoy most about interacting with that person. You can do this before interactions, or in shorter spurts while listening to someone else speak. This, she says, “can change body chemistry in seconds, making even the most introverted among us exude the type of warmth linked to high-charisma people.”

One thing all the experts seem to agree on is that a charismatic person has a profound power on everyone they come in contact with. They can motivate followers and employees to work together in pursuit of mutual goals with a sense of meaning and purpose. But as Psychology Today warned, “If a leader lacks other important skills or sensibilities, compassion for example, the power to charm and captivate might steer us in the wrong direction.”

What’s your charisma score? Take the quiz.
Rate yourself on a scale of 1 to 5, (5= Strongly Agree and 1 = Strongly Disagree) for each of these six statements:

I am someone who…
  1. Has a presence in a room___________________________
  2. Has the ability to influence people_____________________
  3. Knows how to lead a group___________________________
  4. Makes people feel comfortable________________________
  5. Smiles at people often_________________________________
  6. Gets along well with everyone__________________________

Divide your total score by six to get a charisma value.
Based on research of Tskhay, Zou & Rule 2018

Send us your scores and we’ll tell you how you rate relative to your peers.


According to Clark, charismatic people are well liked not just because they can tell a good story, but because of how they make others feel. “Aside from being humorous and engaging, charismatic people are able to block out distractions, leaving those who interact with them feeling as if time had stopped and they were all that mattered. They make people feel better about themselves, which leads them to return for future interactions, or to extend existing ones, if only to savor such moments,” Clark noted.

What’s not to like about that? Not happy with your charisma score? Drop us a line and we’ll be happy to make some suggestions free of charge or obligation.

# charisma  #leadership #extrovert #introvert #career success #Olivia Cabane

Tuesday, August 20, 2019

When Life Throws You into HST (Hospital Standard Time)

I went in for a routine colonoscopy and endoscopy last Tuesday. As many of you know, the hardest part about the procedure is the “prep process.” You have to stop eating for about 24 hours, drink some foul liquid and camp out on the toilet as you “cleanse” your bowels to a shimmery shine.

My docs also suggested that I swallow a vitamin-size “pill camera” while sedated. That way, they could capture some additional images of the digestive tract that the other two scopes can’t normally get. I’ve had a sour stomach the past few months and it had been six years since my last colonoscopy. Any way to get a better look at my insides couldn’t hurt I figured. So, I readily agreed, especially after some quick research showed the pill endoscopy to be a routine procedure 98 percent of the time. You ingest the camera while sedated and then you poop it out a few hours later. No big deal, so I readily agreed.

I snagged the 7am appointment and figured after a little recovery time, I could get back to work for my afternoon appointments. If only.

Long story short, I got home last Saturday—about 100 hours after checking in for my tests. First the good news, there’s no cancer or perforation in the gut. But, as of this writing, there’s still a tiny camera stuck in my large intestine. It’s no longer doing summersaults or spraying pain sparks every five minutes, but it’s in there, nonetheless. We’re just thankful it didn’t have to be surgically removed—it almost did.

First lesson: There are no guarantees in life. If there are no “complications” 98 percent of the time, that means one out of fifty times (2%) there ARE complications. Trust me, the 2-Percent Club is not a group you want to join. It’s painful as hell if you’re in the unlucky 2 percent. I’ve never given birth or passed a kidney stone, but I imagine it’s on that level.

Considering this was my first time ever staying overnight in a hospital. I guess I’ve been beating the odds the past 50 years. But, talk about a painful regression to the mean!

Time stands still….and then it doesn’t

Actually, the hardest part about spending time in the hospital is re-setting your internal time clock to HST (Hospital Standard Time). It’s also known as WST (We’ll See Time) or HUWT (Hurry Up and Wait Time). This kind of internal clock-reset can be more painful than all the needles and IV’s in the arm; worse than all the X-Rays, CT scans and 4 am wakeup calls to check your vital signs.

Being a hospital patient is kind of playing in a 24/7 baseball game. Nothing happens for incredibly long periods of time and then all of a sudden everything happens at once. You wait for hours upon hours for updates on your prognosis. Then, just when you think you’ve been lost in the system, a half dozen white coated doctors, residents, physicians assistants and nurses stampede into your room, pepper you with questions and explain things in medical jargon until your head is spinning.

At 11 am they tell you they’ve scheduled a CT-Scan “downstairs” and instruct you not to eat anything beforehand. So, you rush to the bathroom one last time and wait for the orderly to put you on a gurney for the ride to the imaging room. Eleven-thirty rolls around and no gurney yet. Then it’s 12 noon. “They must have a lot of tests scheduled today” you tell yourself. Then it’s 1 o’clock and you wonder if you’ll be back in time before they close the food service. Then it’s 2 o’clock. You try to sleep and ignore the hunger pangs. Then the nurses shake you out of your slumber at 4 o’clock and scold you for not being ready for your test.

Finally, you’re hoisted onto the cold metal gurney, whisked into a massive elevator and wheeled through a labyrinth of “restricted access” double doors to meet the masked technicians with the needles, probes and syringes. They’re friendlier than the folks at the DMV and IRS—but not by much.

Lesson 2: The hospital doesn’t give a damn if you’re a homeless person or a CEO. You’re on the hospital’s time and it owns you as long as you’re an “admittee” lying there in your open back johnnie gown. There’s not much you can do about it.

Like most of you, I’m used to being in charge of my time. I control the schedule, especially during the workweek. Normally the day flies by and I go home wishing there was more time in the day, because I never got done half of the things I wanted to accomplish. Trust me, boredom hits you hard if you’re not used to it and the loss of control over your time hurts even more.

We have the privilege of being busy

Sure we complain about burnout and having too much on our plates, but we’re lucky. We don’t punch time clocks or do boring, repetitive manual tasks for a living. We don’t have angry customers screaming into our headsets or work in dangerous, filthy conditions.

We’re knowledge workers and professionals who do mentally stimulating work. For the most part, we can choose which clients and customers to work with and abide by a schedule that we and our teams carefully set and control. There’s no “man” telling us what to do. We don’t toil away mindlessly counting the hours to lunchtime or the weekend. We don’t refer to Wednesday as “Hump Day” or greet our co-workers in the morning with a sarcastic “Same shit different day” grunt.

Lesson 3: When you’re a hospital patient you have to think like a prison inmate. You set small, incremental goals to pass the time and keep your spirits up. Get out of bed. Don’t puke or have a “Code Brown” event on the way to the bathroom. Pee into the bottle without spilling. Walk around the hallways for 10 minutes every couple of hours. Do a few deep knee bends to keep the heart rate up. Keep up with your emails. Listen to a complete podcast. Finish one chapter of a book each day. Reflect on the path you’ve chosen in life—and how you ended up in the hospital without warning.

Lesson 4: The hard part is blocking out your thoughts about all the meetings, conference calls, deadlines and family obligations you were supposed to be handling on the “outside world.” Your only job is to focus on getting better. Worrying about everything else that you can’t control will only raise your blood pressure, put more stress on your GI tract and delay your recovery.


I honestly don’t know how the rest of this story will turn out. One thing’s for sure, I will definitely improve my diet, reduce my caffeine intake and stop worrying about all the little things in life beyond my control. Most of all, I will never complain again about having too much on my plate or no time in the day for myself. There’s nothing worse than being bored or being ill. Be thankful for your health—and for the health of everyone you care about most.

Lesson 5: Every single day counts. Make the most of it.

# Colonoscopy complications #irritable bowel syndrome #beating boredom #pill endoscopy  #appreciate life

Sunday, July 28, 2019

Recession coming? Consensus Points to “When” not “If”

Rick Telberg (@CPA_Trendlines) and I did a quick show of hands at last week’s @Accounting Show in New York. To begin our presentation, we asked audience members if they thought we were heading into a recession. More than half the hands shot up immediately and a few more were raised tentatively. That aligned with our 2019 CPA/Wealth Advisor Confidence Survey™ which found that almost half (47%) of the 300 financial advisors who responded expected a recession within 12 months--up from 33 percent who felt a recession was imminent at this time a year ago.

On Friday, the Commerce Department reported that GDP rose by only 2.1-perent in Q2, down from the first quarter’s 3.1 percent. It was the weakest quarterly increase since Q1 of 2017 when President Trump first took office. Further, the Federal Reserve Bank of New York’s recession probability chart indicated a 30 percent chance of a downturn over the next 12 months, up from 10 percent early this year. Experts say the Fed’s probability chart is heavily influenced by the inverted yield curve.

While it’s not time to run for the hills and stuff your money under a mattress, it’s pretty sobering considering the current economic backdrop: Unemployment is supposedly at lowest level since Neil Armstrong man first walked on the moon. GDP growth remains positive and stocks are just about at their all-time high--up 50 percent since 2016.

Yes, we’re savoring the longest bull market and longest economic expansion on record. But, as any gambler or elite athlete will tell you, winning streaks never last forever.
Bob Doll, chief equity strategist and senior portfolio manager at Nuveen wrote in Financial Advisor last week, that stocks are up by double digits this year, as the S&P 500 Index has climbed nearly 19 percent. “The end of the second quarter marks the fourth time that index has been trading in the 2,950 range over the past 18 months (after previously reaching this level in January 2018, September 2018 and May 2019). That means stocks really haven’t gone anywhere in a year-and-a-half,” noted Doll.

And then there’s the the yield curve, which inverted earlier this year. Yield curve inversions don’t cause recessions, but inversions have preceded every single one of the last seven U.S recessions. In fact, the inverted yield curve signaled both the 2001 and 2008 recessions about one year in advance.

Matt Topley, chief investment officer at Fortis Wealth in Valley Forge, PA told me that recently while the stock pullback at the end of 2018 was a buying opportunity, “we are now in a more precarious situation.” He said the inverted yield curve should not be ignored, “and our economy is running out of qualified workers as the jobless rate settles below 4 percent. “Amazingly we have not experienced inflation despite such a historically low unemployment rate, so the stock market continues to rise,” added Topley. That being said, he is cautioning investors to prepare mentally for “recession-size drawdowns in equities in the range of 30 to 40 percent,” but to be aggressive when stocks are on sale.

Meanwhile, The Economist’s R-word index (number of times national financial journalists have been mentioned the word recession ticked up at about the same time. Today, the yield curve suggests that a recession may be imminent, and America’s leading newspapers are discussing recessions more often than at any point since 2012, although Topley says to “ignore the headlines and doomsayers, especially as elections approach.”

Timing is the real challenge

Traditionally, we had to wait for the National Bureau of Economic Research (NBER) to announce a recession after we’ve already been feeling the pain for a, or wait for the Commerce Department to confirm that GDP had declined over the last two consecutive (completed) quarters. That’s like finding out over Halloween that it was a record heat wave in August. It’s certainly not helpful for policymakers, or more importantly for people losing their paychecks or trying to keep their businesses afloat.

As The Brookings Institution reported last month: “The NBER announced the Great Recession in December 2008, a full year after the recession started—far too late to initiate a timely monetary or fiscal policy response.” Brookings, says it’s important NOT to focus on the unemployment rate itself, but on rapid increases in the jobless rate.

Not all jobs created are worth taking

Here at HB, we’ve long been skeptical of the historically low jobless rate, because wage growth has been so meager during this 10-year expansion and because many of the newly created jobs during have been in the low to midrange of the wage scale. In fact, the Labor Depart says almost of one-fourth of those who are out of work have been looking for over six months. The standard measures of unemployment do not count the millions who are back in the workforce, but at a fraction of their former salaries. The stats don’t take into account millions of gig economy workers (young and old), plus mid-career and older professionals who are consultants and contract workers who are doing okay, but who’d rather be employed somewhere full-time with benefits.

The Brookings folks seem to agree with us: “Of course, changes in the national unemployment rate do not tell us everything we might want to know about the health of labor markets. In particular, they do not capture the extent to which workers have left the labor force or are under-employed, both of which are important for understanding the degree of labor market slack,” reported Brookings.

Recession at a 4.1% jobless rate?

As economist Claudia Sahm wrote in a new Hamilton Project at Brookings and Washington Center for Equitable Growth book, if the unemployment rate (in the form of its three-month average) is at least 0.50 percentage points above its minimum from the previous 12 months, then the economy is already in a recession. Still skeptical. Well Sahm’s Recession Indicator has never called a recession incorrectly since 1970 and is usually four to five months ahead of any other credible economists or analysts.

See helpful charts here courtesy of Brookings.

According to Brookings, the unemployment rate in November 2000 was 4.0 percent and by June of 2001, it was had edged up to 4.5 percent. While 4.0 or even 4.5 percent are low unemployment rates by historical standards, a recession had in fact begun in March of 2001, and the unemployment rate continued to rise rapidly. The Sahm indicator called this recession at the beginning of July when the unemployment data for June was released.

So here we are at a half-century low jobless rate of 3.6 percent. Whether you agree with that number or not, if the unemployment rate rises to 4 percent (still extremely low by historical standards), the Sahm index suggests a 76 percent likelihood of recession and if the jobless hits 4.1 percent – just half a percent higher than today—there’s a 97 percent likelihood of recession in the coming months.
Housing hiccups

There are also a number of sobering housing indicators suggesting it’s not a matter of “if,” but “when.” See William Emmons’ Recession Signals: Four Housing Indicators to Watch in 2019
Emmons is an assistant vice president and economist at the Federal Reserve Bank of St. Louis and the lead economist for the Bank’s Center for Household Financial Stability. “Data on single-family home sales through May 2019 confirm that housing markets in all regions of the country are weakening,” wrote Emmons. “The severity of the housing downturn appears comparable across regions—in all cases, it’s much less severe than the experience leading to the Great Recession, but similar to the periods before the 1990-91 and 2001 recessions.”

Last week, Senator Elizabeth Warren (D-Mass.) published a scathing Medium post entitled "The Coming Economic Crash--And How to Stop It." The Democratic Presidential contender pointed the finger at manufacturing slump and recklessly high levels of corporate debt—akin to the junk mortgages we saw during the global financial crisis.
“The overall numbers about GDP or the stock market are great, but they don’t reflect the lived experiences of most Americans,” Warren wrote. “Wages haven’t gone up in a generation and yet the cost of housing, the cost of health care, the cost of childcare, the cost of sending a kid to college have all gone through the roof. The middle class squeeze is real and it has gotten tougher for people over the last few years.”

Finally, a Gallup poll found that even as Americans‘ approval of the overall economy have risen, anxieties about their own personal finances have remained largely the same over the last few years.


Bottom line: you can’t stop a recession any easier than you can hold back the ocean. But you can make a real difference in your clients’ lives by helping them manage their finances and personal dreams when economic prosperity hits is next inevitable speed bump. For more about what your peers think about the economy, the recession and their own firm’s growth prospects, see my recent presentation of the 2019 CPA/Wealth Advisor Confidence Survey™ with the one and only Rick Telberg @CPA_Trendlines.

# Recession #yield curve #Sahm Recession Indicator  #Rick Telberg @CPA_Trendlines  @Accounting Show  #Matt Topley  #William Emmons