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Economic Trends · May 14th, 2024
What this video’s about:
In this video, Paul Gifford, Chief Investment Officer of 1st Source Bank Wealth Advisory Services, discusses the significant impact of the U.S. government on the economy. He emphasizes that while discussions about the economy typically focus on consumers and corporations, it’s crucial to consider the role of the government as well.
Gifford highlights some key statistics to illustrate this impact. Currently, there are 3 million federal government employees and 19 million state and local government employees. This makes up about 13% of the total U.S. workforce. Moreover, the U.S. government’s budget for the year is expected to be approximately $6.5 trillion, accounting for about 23% of the total economy.
What’s concerning is that while the government’s expenditures are high, its revenue falls short, resulting in a budget deficit of about $1.6 trillion each year. This adds to the national debt, which currently stands at nearly $34 trillion. Gifford emphasizes the importance of considering these figures in decision-making processes.
Regarding investment opportunities, Gifford discusses two key areas: the stock market and interest rates. He presents data showing a link between government spending and corporate profit margins. When government expenditures surge, profit margins tend to drop, hurting stock prices. Additionally, he notes the increase in the amount the government pays investors via interest, which has risen by $600 billion annually since early 2020. While this wasn’t intended to stimulate spending, it indirectly contributes to consumer and corporate spending.
Gifford concludes by stressing the significance of these figures in investment discussions and encourages viewers to share the video and subscribe to further financial insights.
In summary, Gifford’s video highlights the substantial influence of the U.S. government on the economy. He suggests that investors consider government actions and expenditures when making financial decisions.
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