Global Uncertainty Likely to Impact Inflation More Than Growth

Jeffrey Roach (00:04):

Hi, I am Jeffrey Roach, chief economist for LPL Financial, and in this edition of the Econ Market Minute, I'll share a few highlights from my Economic Navigator. That's the flagship piece I write each month for relevant charts, see the link to the navigator in the description section below. First, slowing growth but no recession. The economy is slowing slightly due to global tensions, but it is still growing overall, not shrinking. This suggests businesses and jobs should remain relatively stable, and business investment is supporting the economy. Companies are continuing to invest in equipment and technology. That's including AI, which helps create jobs in the near term and provides productivity boosts in the future. As it relates to consumer spending, it's still holding up many households, especially higher income groups, are still spending on travel services and goods, which helps keep the economy moving. Second, low savings rates are here to stay.

Jeffrey Roach (01:02):

Many households are saving less than usual and relying more on credit cards or loans, leaving less financial cushion if conditions worsen. Now for banks and credit unions, that lower savings rate cuts both ways. It can support loan growth, card balances, fee income as consumers borrow more, but it also means thinner household liquidity, buffers, greater sensitivity to job losses or rate shocks, and potentially higher delinquency risk if the labor market weakens. Third, AI is both a disruptor and an enabler. From the April payroll report released May eighth. We realize that not all industries are equally impacted by AI. This is important. Diagnostic imaging centers, for example, an area where AI is thought to replace Humans have increased demand for workers, whereas bookkeeping demand has declined in recent years. Now, William Jevons, he's a British economist, born in the same town as the Beatles, but less famous, explained that increased efficiencies may spark additional demand, and that this concept may help us understand the potential AI impacts on the job market. So AI development is creating new opportunities, so that means, while some jobs may change, artificial intelligence is also expected to create new types of work and increased demand for skilled workers who can use these tools. We believe AI will shift job demands rather than just merely eliminate jobs, entirely increasing the importance of adaptability and new skills. Well, that's all for now, and if you need the details for what I just discussed, click on the link to the economic navigator in the description section below.