Tuesday, June 5th
June 12, 2018 – Breakfast meeting, 7:00 am, SDYC
June 18, 2018 – Board Meeting, 5:00 pm, SDYC
Steak Fry, 6:00 pm. SDYC
July 16, 2018 – Annual Golf Tournament, River Walk Golf Club, noon registration, 1:00 pm start
The Point Loma Optimist Club was recently recognized by several local elementary schools for our financial support during the past school year. Members of the club attended meetings at the schools where the Club was recognized. Ocean Beach Elementary thanked the Club for the support to their school garden and for the recent purchase of computers for the students use. Dewey Elementary thanked the Club for our ongoing support of their STEM education program and their Arts program. Silver Gate Elementary thanked us for their new flag pole. Here are a few shots to show you the fun!
John Leonard, a Vice President with JP Morgan, visited with the Point Loma Optimist Club this morning to give us an overview of the economy and where it might be headed. John is a Point Loma resident and has been with JP Morgan for the past 11 years.
John focused his attention on three market characteristics, the economy, interest rates and employment factors. On the economy, John said, “This is the second longest period of expansion in history. We believe 2018 will also be a positive growth year for the economy.” John explained the extraordinary slow growth that started back in 2009 is one reason for this extended period of expansion. He also projected the continuing stimulus injections (government spending more money on infrastructure) will push the economic growth into 2019, but there may be a slowing of the rate of growth.
The reason for the slowing of the growth is jobs. Not the creation of jobs, but the inability of the population to meet the demand for the types of jobs being created. “The slow down in the rate of the economic growth will be caused by the lack of skilled labor to fill the jobs being created. We need to retrain our labor force to meet the demands of the new economy,” he said. The unemployment rate stands at 3.8% at the end of May. The historic average unemployment rate is 6.8% over the past 50 years. Wage growth is starting to see an upward swing at 2.8% at the end of May, but it is still quite low. The historic average for wage growth is 4.1% over the past 50 years. This helps explain the continuing low inflation rates we have been experiencing.
Following a similar pattern, interest rates are still at remarkedly low points. Today, the Fed funds rate sits at 1.5%. John expects the Fed Board of Governors to continue to push the interest rate up, 2 or 3 times more in 2018. The historic average Fed rate sits at 3.5%, even with 3 quarter point bumps this year, the rate would still only be at 2.25%. John believes the Fed will be very careful with their rate increases. He pointed out that 11 of the last 13 recessions were caused by the Fed mismanaging the rates.
In answering some questions from the members, John pointed out that corporate earnings per share and profits per share continue to exceed analysts estimates. He believes a slow shift from growth stocks to value stocks will begin to take form in the general markets. He is bullish on the emerging markets and believes there will be good growth potential there in the next several years. And, John suggested the new norm for the markets will be higher volatility, requiring the smart investor to make sure they have a diversified portfolio. Thanks for stopping by this morning, John. We appreciate your insights!