HispanicBusiness

An Edward Jones' chief investment strategist in New Bern for a 2013 economic forecast for clients on Thursday evening called President Obama's choice for treasury secretary "good, not great."

Earlier in the day, Obama had nominated White House chief of staff Jack Lew to replace outgoing Treasury Secretary Timothy Geithner.

Responding to a client question at the Carolina Colours Pavilion event, Kate Warne said Lew is "an expert on some of the complex things he needs to know but does not have experience in foreign markets. He does know one piece of the job really well."

Warne, welcomed and introduced by Dan M. Roberts IV of Edwards Jones in New Bern, holds a doctorate in economics from Yale University after studying at London School of Economics and Swarthmore College. She joined the company's research department in 1997, was named a firm principal in 1999, became a member of the Investment Policy Committee in 2003, and has appeared on most major television networks and been quoted regularly in publications including The Wall Street Journal, New York Times, Financial Times, Forbes and Fortune.

Much as Tom Horne of RMS McGladrey did in hosting a Federal Reserve Bank economist Wednesday at its annual economic forecast, Warne came to discuss current market conditions and other timely issues of investor and business concern.

Both said most reporting of the new tax law fails to highlight a 2 percent payroll tax increase for Social Security and that the debt ceiling, sequestration, and the content of a real federal budget versus a continuing budget resolution leaves uncertainty both the markets and business inclination to expand.

Horne said, "Looking at the new health care act as part of the game plan, what we at McGladrey are seeing in the new tax law is a lot to do about nothing." There are 14 new taxes in the Affordable Healthcare Act and the medical and dental sector is "not as profitable as many think."

He sees trends toward more privately owned businesses being owned by private equity groups and toward a North Carolina consumption tax that phases out corporate and individual income tax.

Horne said 2012 in this region saw restaurant and fast food business fairly stable, larger manufacturers doing pretty well with some talking about expanding, auto sales trending upward with a look toward fuel economy, agriculture having a good but not exceptional year, and real estate up and down with less expensive houses selling more and commercial sales slow and facing another possible run in bankruptcies.

Warne said this U.S. economy is experiencing a "slower than the average recovery from recession but it is still growing, chugging along."

Although the job market and unemployment in North Carolina make its growth somewhat less, Warne said, the national "average is just above 2 percent a year. But modest growth isn't bad. In fact, much of the rest of the world would love to have that growth."

Cyclical sectors of the economy are starting to rebound with new home sales still not as high as typical numbers but consumer debt dropping sharply to near record lows, she said.

"Consumer spending will be the driver of recovery," Warne said.

Warne said the Federal Reserve's commitment to keeping interest rates where they are for two years or until unemployment reaches 6.5 percent, makes investment in certificates of deposit or short term investment less favorable than staying invested in a diverse portfolio.

She said stocks are a good place to be and even with multiple recessions and the terrorist attacks, there have always been positive markets by years later for those who stay in. International stocks look especially attractive.

"This time is no different even if it feels like it may be because of economic policy uncertainty," Warne said. "Stay invested so you don't miss the best deals and the results will average about 7 percent per year over 10 years. The market doesn't care how policy uncertainty is resolved, just that it is resolved."

Warne said, "The outlook for 2013 is pretty good" even with more volatility highlighted by the deficit drama.



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