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The Real State of the Union (RSOTU)



In President Biden’s early remarks in his State of the Union (SOTU), he stated the economy is in great shape.

He said, after a mild blip early last year, GDP grew 3% during the second half of the year and forecasts are good.

We’ve added 12 million new jobs and unemployment remains at historically low levels.

Fact: Nine million jobs were employees returning to work after the pandemic shutdown.

Fact: Unemployment remains low because millions have not returned to the workforce relying instead on government assistance which pays more not to work.

Fifty years of government service and President Biden has no idea how the world works.

Typically, the Federal Reserve does not feel the need to intervene in a “good economy”.

However, since March, 2022, the Fed has raised rates from -0- to 4.50% in an attempt to stave off inflation caused mostly by the Fed and the Democratic Congress.

In November, 2021, when Joe Biden was elected president, a dozen eggs cost $1.72. Today, a dozen eggs cost around $5/ dozen. Does the president know what a dozen eggs cost or a gallon of gas?

On President’s Day, our president was in Kyiv, Ukraine, promising the people of Ukraine that we are with them until the end. More spending!

There was no mention by anyone in the Democratic Party about President’s Day. Our country is in debt like it has never been due to elected politicians who spend our tax dollars like there is no tomorrow and then spend some more.

As we re-finance the debt at higher rates caused by inflation, the debt service is going to become one of our greatest liabilities.

I listen to and read the local and world news, generally, economically and financially, but when it comes right down to it, I need to make money for my clients every day.

The Wall Street Journal ran an article last month citing Wall Street’s economists’ poor predictions.

I pay little attention to them. Even with the overall market malaise in 2022 with the S & P 500 down 19% and the tech-heavy NASDAQ down 32%, our portfolios held up nicely with unrealized gains holding their own.

The stock market is facing more negative factors than positive factors. Inflation is eating into workers’ salaries and wages and higher interest rates are going to cause layoffs.

Housing is being affected by higher mortgage rates. Valuations are falling by record numbers monthly.

Automobile sales, another big driver of the economy, will be affected by higher interest rates.

401(k) providers are reporting record numbers of emergency withdrawals by participants. It’s a different kind of a “trickle-down” economy.

For these reasons, I have continued to realize some of the remaining unrealized gains in companies that have outperformed the market.

In turn, I have re-invested the proceeds putting more money to work in what I consider under-valued companies that pay better dividends.

This portion of the portfolio will perform much like a bond portfolio with little volatility, pay bond-like yields yet provide appreciation as time passes.

Some of these caterpillars may turn into butterflies but they will always pay better than market dividends. Still, there is a good allocation to some of our favorite growth stocks.

“It’s tough to make predictions, especially about the future.”  Yogi Berra

1 Comment

  1. kbrahmer on March 5, 2023 at 5:24 pm

    Carter, you need to run for a political office where you can act in the manner to which you speak. You have the credentials. Do it.
    I and many others will agree with your views.

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