SOURCE: DeYoe Wealth Management
June 24, 2009 13:02 ET
San Francisco Bay Area's DeYoe Wealth Management Cautions Economic Recovery May Be Slow and Volatile
BERKELEY, CA--(Marketwire - June 24, 2009) - With the S&P 500 up 35 percent since its low
in March 2009, there are reports of expected economic recovery and growth
along with the sense that the market will continue to move higher.
Jonathan DeYoe of DeYoe Wealth Management says caution is advised and
offers three reasons why the recovery may be slow and volatile.
1. Unemployment Growth: At the end of 2007, seven-million people were
unemployed. Contrasting that figure with the U.S. Bureau of Labor
Statistics report that 14.5 million were unemployed in May 2009,
it's evident that there are seven-million incomes no longer
dedicated to consumption. Because profits are ultimately derived
from consumption, the fact that unemployment is expected to
continue to grow by a half million each month will be a drag on
the eventual recovery and on corporate profits.
2. The New Frugality: The unemployed as well as those with jobs are
choosing to spend less and pay down debt, which is a good practice
for those serious about their financial futures, but it will affect
economic recovery. The home equity lines and credit cards used to
finance aggressive spending are gone, resulting in a chunk of
spending that will probably not return for many years.
3. Government Stimulus Paradox: Every dollar we borrow today will
equate to more than a dollar out of future growth. When rates
increase, the cost on the growing debt will eat up more and more of
the GDP and it will be paid off by borrowing money, inflation, or
increased taxes, all of which will hamper growth. However, if the
government stimulus works, it will stimulate more growth today than
it harms in the future.
While the economy is recovering, DeYoe says consumers should consider the
following actions: "Have a plan, know how much of your income can be spent
and how much to save, let go of the buy and hold mentality, and do not be
afraid of taking profits or cutting losses short and quickly. Maintain an
'advance and protect' investment strategy. Look for solid balance sheets
and dividends because as dividends are reinvested, the foundation will be
laid for the next advance."
About DeYoe Wealth Management
DeYoe Wealth Management is a holistic wealth management firm that helps
clients make the right decisions for their financial futures. Services
provided include wealth planning, trust services, tax planning, risk
management planning, legacy and estate planning and philanthropic planning.
Jonathan DeYoe is a Chartered Private Wealth Advisor and an LPL Financial
Registered Principal. Securities and Financial Planning offered through LPL
Financial, Member FINRA/SIPC. For more information, go to