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What Happened Last Week and What It Means to You: Week Ending October 20, 2023

Week Ending October 20, 2023

Consumer sentiment declines…The October U of Michigan consumer sentiment indicator declined more than anticipated.

What does it mean – October reading came in at 63 down from 68.1 in the prior month. This is the lowest drop since May while inflation expectations rose to the highest level in six months. According to Joanne Hsu, director of U of Mich consumer surveys“Assessments of personal finances declined about 15%, primarily on a substantial increase in concerns over inflation, and one-year expected business conditions plunged about 19%.”


More new entrants into the labor force are capping wage growth…As cost of living skyrockets with inflation more people are coming out of retirement or are seeking full time work.

What does it mean – No longer can the government subsidize or facilitate bad behavior. Government overreach led to massive inflation, job shortages, huge increases in the minimum wage, and direct competition to employers forcing many small businesses to shut or reduce hours to increase wages to compete with the government handouts creating massive inflation and increasing the cost of goods sold. Otherwise know as inflation.

Are people willing to take less to work at home…Wage growth among non-supervisory workers is back at pre-COVID levels.

What does it mean – According to Deutsche Bank and Havner Analytics, the chart below shows nonsupervisory rolls are now back to pre-COVID levels. Bottom line, more and more employers realize that productivity increases when you are in the office.

Remote work job postings decline…As more people seek work, remote job postings decline.

What does it mean – Employers are tightening up. Signs of a tighter job market are increasing throughout the country.

The number of states with significant increases in continuing jobless claims keeps rising…In the last six months since we last pointed this out it has more than doubled.

What does it mean – States are seeing a huge increase in jobless claims. Yet, the Bureau of Labor Statistics still shows a very tight labor market.

Record growth…Big government grows while the economy stumbles.

What does it mean – According to the Congressional Budget Office, federal spending should total $6.131 trillion in the fiscal year that ended on September 30. That is over $$2 trillion more than the government brings in with record low unemployment. That number also includes the effects of the Supreme Court striking down much of President Biden’s plan to forgive student loans. That decision created a $333 billion “negative outlay” for Fiscal Year 2023. Without that decision the total federal spending would have been $6.464 trillion. First Trust estimates that would translate to 24.0% of GDP, in a year when the jobless rate averaged 3.6%.

First Trust does an incredible job providing some historical perspective. In fiscal year 2019, the last year prior to COVID, the jobless rate averaged 3.7% and federal spending was 21.0% of GDP. Back in 2000, at the peak of the first internet boom, federal spending was 17.7% of GDP.

Think about the above statement. We had record unemployment at 3.7% in 2019 which should and did translate into record tax revenue. Yet, our government was still running a deficit in one of the best years for GDP growth in the last 20 years. One should ask three simple questions. First, on what did the government spend your money on? Second, is the government more efficient than you? Third, can you do better with your money? In other words, are we an informed and educated voter/consumer?

Below shows the massive increase in spending that has ballooned to record levels and is growing every day. This also corelates with when our nation started to see slowing economic growth as we took on the behavior and identity of a nation more dependent on government and less on oneself.

The proof is in the pudding. We saw government spending decline in the 80’s and 90’s as a percent of GDP and saw GDP growth return to an average between 4% and 5% during that time. These numbers validate that as the Government grows, GDP growth slows. Meaning there is an adverse relationship to big government and economic growth.

Unfortunately, from 2010 when government health care exploded with Obamacare and the public takeover of student loans, the government has proven that the more they get involved in your life the more their services cost and the more debt our citizens acquire individually and as a nation. Health care costs have exploded. Just look at your health insurance bill. Student loans have gone from 800 billion in the private sector to nearly $1.8 trillion as of June 2022. Yet the very universities that increase costs and mandate tenure are creating a society of dependence.

Brian Wesbury says it best. “Imagine ten people stranded on an island, living at subsistence, each person using a spear or even her hands to catch two fish each per day, barely surviving. Then two of them decide to risk it all and build a boat. They go out one day and bring home twenty fish. Hallelujah! Enough to feed everyone.

With this bounty, the others use their talents to find easier ways to get their two fish. Some of them climb the trees, bring down coconuts, and trade for fish. Others build fires to cook the fish just right. Others build better huts. And so on and so forth. In other words, the innovation of making that boat and net didn’t just help those original two; it helped everyone. Life is better.

But one of those islanders isn’t happy. He watches all that trading and realizes that the two owners of the boat and net who took the big risk are better off than the rest. It wasn’t like it was before, where all everyone had was two fish per day, barely eking out survival, but at least they were equal.

The unhappy islander – let’s call him Sernie Banders – comes up with a plan to bring “equity” to the island. He gets them to impose an 80% tax on the “rich” boat/netmakers! That way when the boaters bring in their haul of twenty fish, the rest of them get their “fair share” of sixteen (two fish per person, eight other people), with no extra work.

Common sense tells us what happens next. The inventors have little incentive to maintain or repair the boat or fix the net. Why waste your time or take a risk when the rest of the islanders are just going to seize the extra value you’ve created? In the end, the islanders are eventually back to where they started. Or maybe worse because they forgot how to fish.”

Bigger government means less innovation, less investment in and maintenance of capital, and less economic growth. Along with many of our elected officials and what is taught in our universities are promoting the very dependence on government that destroys a philosophy of self-determination and the pride that goes with living a life of gratitude vs. one of envy. They just have not figured out that Socialism Sucks!!!

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.