Spring is here and good economic times seem to be returning. More Americans are getting back to work as usual, many with newly-injected vaccines. The stock market is surging, with the Dow and S&P 500 rising to near all-time highs.
Some states that enforced the most strict lockdown regulations are now starting to allow citizens to return in larger numbers to restaurants, theatres and entertainment venues. Even in New York city, with some of the most draconian shut down rules in the country, it was announced last week that Broadway musicals may return as soon as this fall.
But with that backdrop, and with financial markets seemingly revving up, some in the media are urging caution, saying the underlying economic fundamentals could usher in a swift and forceful market correction.
“We have to remember that we saw technology peak in late February and then it dropped significantly. Some of them are negative year to date,” said ER Shares CEO Eva Ados, during Friday’s edition of The Claman Countdown on the Fox Business Network. “Value companies, we’re seeing some of them trading at an all-time high, even though some of them might have bankruptcy risk and weak financial statements. So we have seen a reversion to the mean with overreactions in both growth and value. And investors have to be very careful, going back to traditional fundamental metrics.”
Television pundits will tell you over and over that the stock market is not the only, or sometimes even the best, barometer with which to judge the economy. Thus it would be incorrect to point to a surging stock market as evidence the American economy has rebounded from the pandemic and, more accurately, many states’ shutdown response.
These same hosts and analysts may differ on policy, but they cannot argue results. After a sluggish economic era for many years following the crash of 2008, employees saw rising paychecks and inflated 401k accounts during the last four years.
Now, many Americans are watching anxiously as the new Democratic administration plans massive tax hikes on individuals, families and businesses. Much of the market’s success, or failure, could hinge on the deleterious effects of these policies if they are eventually rammed through.
“We think it’s going to be detrimental for our economy, “ Ados told Cheryl Casone. We all know that entrepreneurial companies are the ones that generate the most jobs, compared to the government, and if you tax them higher, you’re taking away the incentive they have to create more jobs, invest more in research and development in the future of our economy, the growth of their company, property, plan and equipment.”
With these possible punishments looming on the horizon, many businesses may already be eying the exits, in efforts to protect their companies, employees and future growth.
“We will also have more companies leaving the U.S. They’ll have an incentive to move to tax havens, such as Bermuda, UAE, and this has a multi-layered effect. The more people you hire, the more money they have to spend in the U.S. economy, and now we are reversing it. We are going the opposite direction.”
Ados boiled down her conversation to this one major risk that could cause the U.S. economy to take a quick turn for the worst.
She didn’t hesitate in saying “certainly it’s taxes. That’s our main concern because the growth of this country is entrepreneurial companies, and without entrepreneurial companies keeping the talent here, keeping technology and growth, and supporting bureaucracy and regulation, unfortunately this is the biggest threat our economy can see.”
Americans are welcoming spring with a feeling of economic optimism. Their hope is that the good times continue rolling, and that burdensome taxation doesn’t crush the recovery just as it is getting started.
Rick Schultz is a former Sports Director for WFUV Radio at Fordham University. He has coached and mentored hundreds of Sports Broadcasting students at the Connecticut School of Broadcasting, Marist College and privately. His media career experiences include working for the Hudson Valley Renegades, Army Sports at West Point, The Norwich Navigators, 1340/1390 ESPN Radio in Poughkeepsie, NY, Time Warner Cable TV, Scorephone NY, Metro Networks, NBC Sports, ABC Sports, Cumulus Media, Pamal Broadcasting and WATR. He has also authored a number of books including “A Renegade Championship Summer” and “Untold Tales From The Bush Leagues”. To get in touch, find him on Twitter @RickSchultzNY.
