Eric Mason is a published economist who currently works in the public sector as a Chief Financial Officer. On this episode of CFO at Home, Eric and Vince discuss the differences between the stock market and the economy, the impact of companies like Google on the competitive marketplace, ways the government can aid in the current US economic recovery, and more.
- Key Takeaways
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- Ask an Economist Question #1 - Why are the stock market and home sales going up when the economy is “in trouble”?
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- The stock market moves and reacts quickly to current events. Consumers purchase stocks because they believe its value will grow in the future.
- Home prices do well as long as the portion of the population that is most apt to purchase a home is doing well
- The economy moves more slowly than the stock market; stock market data is updated in milli-seconds, economic data is analyzed and updated quarterly. It more accurately reflects the present.
- When people talk about “The Economy” common measures of health are:
- The Unemployment Rate
- Gross Domestic Product (GDP) - Combination of 4 inputs:
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- Investment
- Government Expenditure
- Consumption
- Net Exports
- ALLL - Allowed Losses for Leveraged Leases - Measurement of toxic assets held by banks
- Labor Force Participation Rate
- Ask an Economist Question #2:
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- What determines if Antitrust action against companies like Google is good for the economy or not?
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- Is the company causing any economic inefficiencies?
- Does the company behave as if it has competitors?
- What type of Government intervention do you think would be most effective right in terms of helping the US economy recover?
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- Production of products that the free market cannot get the financial return needed to produce them (example: Infrastructure spending)
- Ask an Economist Question #3
- Fox Business - “Atlanta Fed president about uneven economic recovery”
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- Hotels, restaurants, small businesses and minority and lower-income communities, in particular, are “seeing much more difficult situations”.
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- What can be done from an economic policy standpoint (gov’t, public sector) to help with recovery in these areas?
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- Beyond the short-term safely nets (enhanced unemployment), investment in skills training is needed as the face of economic hubs in metropolitan areas where many service-driven businesses are located changes post-pandemic
- The “Work from Home” culture that’s emerging post-pandemic benefits those who have jobs that fit that model, but hurting those in the service industries that those work from home workers relied on in the past.
