Does history repeat itself?
Tommy Williams  We study history for numerous reasons. Many find it just plain interesting; others also think it has value relative to effectively navigating the future, even others are just curious (hence, the popularity of 23 and Me  the DNA test which can share notions about your ancestry). Cliches on this subject abound: the more things change, the more they remain the same, or those who dont know history are destined to repeat it, etc. etc. But what about economic comparisons to past recoveries when we are living in an unprecedented period. Back to my old friend of a friend Brian Wesbury, Chief Economist of First Trust Advisors. I have been particularly taken by his observations of our current economy. He contends that people make comparisons between this recovery and those in the past as if its apples to apples. For example, comparing job growth today to job growth after the 2008-2009 Great Recession. All this to make the case that government spending creates those jobs. He goes on to say there is nothing normal about the current economy. Government leaders have done things in the past year that are unprecedented  never happened before. The downturn in the economy last year was not a normal recession, and the return of growth in the past year has not been a normal recovery. According to Wesbury, we are still 7.6 million jobs short of where we were in February 2020. Yet, retail sales (which fell 20% during the year ending April 2020) have risen 51.2% -- more than recovering. In fact, in the past 24 months retail sales are up 10% per year, on average, versus a 3.6% growth rate from 2014-2019. This is only possible by having the government borrow, print, and distribute money for people to spend today. Here, in 2021, the government is paying people not to work so they can buy things they did not produce. That is a question for history to answer. One would first have to know what would have happened had the government not stepped in. Desperate times call for desperate measures. We do know that when the government borrows money from the Federal Reserve (which the Fed creates out of thin air) it is actually borrowing money from future taxpayers. That does create spending  the primary engine that drives our economy  but it is not sustainable. To use the Feds favorite term, its transitory. Here is where a study of history is useful. Anything that comes under the heading reopen the economy. You cannot start the economy like a car engine. Supply chains are damaged and must be repaired. Many small businesses have been crushed. Remember, according to the Small Business Administration, 99.7% of the U.S. economy is made up of these very small businesses. In this context a small business is a company with 500 or fewer employees  though the majority have 50 or fewer on the payroll. That brings me back to my soapbox. It is all about herd immunity. Ending this Pandemic in a way that most people feel comfortable again may be more important than many realize. If youve been vaccinated, I applaud you. I think we all can agree the government spending machine is unsustainable. Per the U.S. Bureau of Economic Analysis, healthcare makes up 18% of our economy and the ongoing Pandemic remains our largest challenge. On the topic of historical study and medicine, let me close with a totally unrelated shout out. My neighbor, Dr. Jim Ciaravella  retired heart surgeon, turned artist and now accomplished author  has published a book entitled Charitys Children, The Long Days and Nights of the Iron Man. It is about his personal 11-year journey at New Orleans Charity Hospital from 1968 to 1977. I am reminded that God did not distribute talent equally among all His people. Dr. C got more than his share! The book is not about pandemics or economics, but it has been a while since I picked up a book and could not put it down. It is a must read. I highly recommend it! The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing involves risk including loss of principal. RFG Advisory and its Investment Advisor Representatives do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. Please consult your own tax, legal, and accounting professional for guidance on such matters. Visit us at www.williamsfa.com. Tommy Williams is a CERTIFIED FINANCIAL PLANNER Professional with Williams Financial Advisors, LLC. Securities offered by Registered Representatives through Private Client Services, member FINRA/SIPC. Advisory products and services offered by Investment Advisory Representatives through RFG Advisory, a Registered Investment Advisor. RFG Advisory, Williams Financial Advisors, LLC and Private Client Services are unaffiliated entities. Branch office is located at 6425 Youree Drive, Suite 180, Shreveport, LA 71105.