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What Happened Last Week and What It Means to You: Week Ending July 28, 2023

Week Ending July 28, 2023


GDP up 2.4%…Wall Street celebrates. Main Street gets the bill.

What does it mean – We are celebrating growth that is becoming more dependent on government every quarter. When you subtract out non-defense spending, the economy grew at 1.9%.  The U.S. Government is now well over 20% of GDP and is suffocating small business creation due increasing costs of capital over regulation and direct competition for employment.

Historically from the 80’s through 2008 the government as a percentage of GDP was kept relatively in check at around 15% to 16%. Obamacare blew that up and prior to the Chinese virus it moved up to about 17% to 18%. Meaning Government grew by 20% in size in 2010. After the massive spike in government spending in 2020 through 2021, we have seen government expenditures as a percent of GDP per quarter hover over 20% plus. While stable for nearly 30 years, the government is now over 40% larger in just 10 years. No wonder there is a housing crisis in DC and Northern Virginia.

We are either in a constant state of war or there are aliens running the White House, every government agency, and both houses of Congress.

Heck it must be true. For the first time since the investigation into Elvis’s disappearance, there is a by partisan agreement to investigate the DOD’s secrecy around UFO’s. Maybe they will figure out who is actually running the white house and both the Senate and House.

Here is a look at the explosion of Non-Defense Government Spending.

National Debt…Conveniently left out of the GDP report and missed by the media. With $32.6 Trillion in debt as I wrote this. You have to ask, “why bring this up?”

What does it mean – Remember when Washington believed in fiscal responsibility? O.K. 1/2 of DC, I mean 1/3 of DC believed in fiscal responsibility. The American dream was robust and ignored the growing chaos of social programs we now know are suffocating the needed growth to get our financial house back in order.

While the markets celebrate a GDP that looks to be range bound around 2% if lucky. This is a long way from the robust growth of the economic expansions of 3.5% to 4% on average in the 1980s and 1990s. In fact, this 1970’s dismal growth will not keep up with the interest payments and needed revenue to maintain our government. Bottom line, we are not growing anywhere near fast enough to reduce the explosion of debt or sustain the social programs so many Americans have become accustomed to since the days of Lyndon Jonson.

Below is a look at our interest payments alone. Current interest payments are pushing through $1 trillion a year. The U.S. is on track to collect about 4.9 trillion in Revenue, another record. Yet, in $2022 we spent 6.3 trillion and on track for a lot more in 2023 thanks to an increase in the debt ceiling of an additional 4$4 trillion. Yet, the IRS continues to collect more revenue every year, but somehow our elected officials find a way to spend it. Our elected officials approve budgets that are nearly 30% more than we bring in every year. With rising interest rates and massive spending, the American taxpayer and our economy is facing a new reality.

Personal consumption, equipment orders and construction led the way…While small business struggle to get a foothold, large corporate spending on equipment grew nicely.

What does it mean – Fixed equipment and equipment ordered by manufacturing saw nice growth as new factories being built here and abroad are starting to come online and demand new equipment. The move away from China continues as manufacturing heads home or relocates to other parts of the world. here are the destinations for US companies relocating activity out of China.

Foreign direct investment in US manufacturing continues…As China becomes too expensive and continues to blackmail and or extort companies of their intellectual property, companies begin to realize it is now to their advantage to be closer to the buyer.

What does it mean – Manufactures are finding out that bad energy policy and overbearing governments like China combine for an unpredictable business environment. So, welcome home.

Let’s Make it in America.

Extra cash tends to burn a hole in Americans’ pockets…I guess that old saying, “you can’t take it with you”, holds true for most Americans.

What does it mean – When looking at the chart below and knowing my natural tendencies, I can pretend that human nature is different in America or recognize the fact that human nature is the same and people are predictable. That their behavior is dependent on the responses they live with or get from loved ones and society.

When you are free of government intervention and not dependent on it, you have a mentality of ownership and are hard wired to produce and be self-sufficient creating growth and benefiting from owning your inventions, words and hard work. We call it the American Dream. America is the only country in the world with a “mission statement” and a “dream”. When asked, “what do you want from America?” People from all over the world instantly say, “the American Dream.” No other country has a “dream or a mission statement.”

Those less fortunate folks are born into a society or country dependent on government, realize from an early age, that a government big enough to give it to you, is big enough to take it away. They are forced to save extra, knowing that one day they will need it. That few have access to capital and in many parts of the world the government does not protect intellectual property. They recognize that their government pension will not be enough to keep up with the cost of government and the taxes it demands to defend and support the entire country with medical care, housing, and food.

Or, maybe the below graph proves our rugged individualism, that we Americans are risk takers and love to live on the edge. I will never forget when I got into this business and my boss told me to go buy a new car. He shared with me the idea of motivation. I got the car and married his daughter. Well worth the risk!!

This graph really has two scenarios or stories to tell. The first, one of newfound dependence on a government growing out of control. The second is in direct conflict with the first. It is the belief that all you need is a dream and hard work for your American Dream to come true. The desire to keep investing in yourself and your future.


Let’s roll America!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

Jeannie Ewing-Nicholson

Operations Manager

Jeannie started her career in the Financial Services industry in 1994 with Oppenheimer & Company. As part of the De Groote Financial Group, Jeannie is responsible for the operational needs of the firm including cash management and account administration. With her upbeat attitude and attention to detail, Jeannie provides an efficient streamlines experience to ensure clients meet their goals. Jeannie enjoys travel, outdoor activities, Pilates, and is a football and basketball fan. She resides in Westlake Village with her husband, daughter and son.

Mary-Ellen Lykken

Executive Assistant

Mary-Ellen, Executive Assistant at DFG, keeps the office running smoothly by providing administrative support and assisting with scheduling and organization. With a background in human resource and office management, Mary-Ellen comes from the non-profit and services industries.

Outside of the office, Mary-Ellen is committed to the advancement of independence and productivity for those with disabilities. By telling her story of the challenges and joys of raising a child with complicated disabilities, she hopes to help others navigate similar circumstances.

She is happiest when visiting her two grown sons. Otherwise, you can find her competing on the pickleball courts.

Sara Mariniello

Operations Manager

Sara is new to the financial industry only starting in 2022 when she was hired at De Groote Financial. As Operations Manager, Sara is responsible for all the paperwork surrounding opening accounts and investment paperwork and is also responsible for much of the client communication. Sara has her bachelor’s in science and nursing from Concordia University, Texas and worked as nurse for over a year prior to moving back to California. She loves all things sports and church related and is likely spending every free moment with her Husband visiting family in Texas and New Jersey.

Fadi Ahmed

Chief Operations Officer and Chief Compliance Officer

Fadi works with clients to ensure an exceptional experience. He coordinates and assures the planning process and wealth management tools are at your fingertips to provide the clarity you deserve and the transparency and access to all your accounts. Fadi ensures the data and information is reflective in our planning software. All changes and updates flow through his desk and he coordinates those changes with the rest of our team.

Andrew Krout

Wealth Advisor, Co-Chief Investment Officer

Andrew Krout is a Wealth Advisor at De Groote Financial Group, LLC. He also serves as a Co-Chief Investment Officer for the firm, focused on wealth management.

Previously, Andrew served as CIO with Kelly Financial in Boston Massachusetts since 2013. He is a licensed investment advisor representative and insurance producer. He graduated from Saint Francis University with a bachelor’s degree in both finance and accounting. He is a candidate for CERTIFIED FINANCIAL PLANNER™ designation. Andrew holds life insurance licenses in Massachusetts, New Hampshire and Connecticut.

Andrew is passionate about serving his clients and investment management and how to apply news and current events to investment decisions. He played Division 1 golf in college, and still enjoys playing and watching the sport in his free time.

David Darst

Co-Chief Information Officer

David Martin Darst, CFA is an Investment Advisor to DeGroote Financial Group, specializing in asset allocation and product selection. Previously, David served for 17 years as a Managing Director and Chief Investment Strategist at Morgan Stanley Wealth Management, with the responsibility for Asset Allocation and Investment Strategy. He joined Morgan Stanley in 1996 from Goldman Sachs, where he held Senior Management Posts within the Equities Division and earlier, for six years as Resident Manager of their Private Bank in Zurich.

David is the author of 13 books, including bestsellers The Art of Asset Allocation, 2nd Edition (McGraw-Hill), and The Little Book that Still Saves Your Assets (John Wiley & Sons). He also appears as a frequent guest on CNBC, Bloomberg, FOX, PBS, and others, and has contributed articles across a variety of publications.

David graduated with a BA in Economics from Yale University, and earned his MBA from Harvard Business School. He has lectured extensively at Wharton, Columbia, INSEAD, and New York University Business Schools, and for nine years, David served as a visiting member at Yale College, Yale School of Management, and Harvard Business School. He is a CFA Charterholder and a member of the New York Society of Security Analysts and the CFA Institute. 

Doug De Groote

Managing Director

Doug is a Certified Financial Planner™ (CFP®) with an MBA in Financial Planning, and is an active member of the Financial Planning Association (FPA). Before establishing De Groote Financial Group, Doug founded the United Wealth Management division of United Capital. Prior to that, Doug was a partner at Crowell, Weedon and Co. He regularly contributes to a variety of financial and general media.

Doug’s passion, and what he believes, is that everyone deserves the opportunity; they deserve to have the freedom and responsibility to be pro-active in achieving independence and financial success.

Doug’s life is focused around his family, wife and three children, and making sure they get the foundation that is necessary for them to have the awareness of the opportunities that abound in our great country.

Doug helps increase his client’s awareness and success, to identify and take advantage of opportunities that present themselves and help protect them from some of the pitfalls or obstacles that are thrown in our paths. With regards to their financial circumstances, Doug helps his clients identify their goals, plan for various outcomes and manage their assets to help them make their vision a reality.