First Commonwealth CEO offers economic forecast
Richard Applegate, president and chief executive officer of First Commonwealth Financial Advisors in Pittsburgh, has a second life as an actor, appearing in film and on television. But his business professional life is anything but scripted – he helps people invest their hard-earned savings to ensure their financial future is stable.
Predicting one day at a time in the volatile stock and bond markets is not easy, but on Jan. 15, Applegate spoke to a large crowd in Bethel Park about the upcoming year.
“We are getting our act together in this country,” Applegate told an audience of members of the South West Communities Chamber of Commerce and the Peters Township Chamber of Commerce. “We are on the right track.”
But that, Applegate said, does not mean everything is rosy. There are plenty of unknowns, but collectively, the market trends are on the upswing. Consumer confidence is improving and in Applegate’s words, is good. But, some trends are predicted to drive the confidence downward, including the recent elimination of the two percent cut in the payroll taxes.
Without the extra money, consumers won’t eat out as frequently, will eliminate extras, like going to the movies, and will impact the retail sector negatively, causing retailers to forgo additional hiring.
The national unemployment rate is already more than seven percent and not likely to spiral downward any time soon, Applegate said.
Internationally, some markets, like Ireland, are on the minus side, but emerging markets may be found in countries like Brazil, Russia and China, Applegate said. As for India, Applegate said, the economy is over priced.
Applegate is no fan of politicians in Washington, D.C., calling their recent activity on the fiscal cliff, “moronic behavior.” He said the elected officials imposed a deadline of Jan. 1, 2013, then nearly missed the date. Now, he said, politicians are battling with a decision on the debt ceiling, a trend playing havoc on the stock markets.
Some good news – the housing market is looking brighter with more and more people buying homes. With extremely high rents in some areas, buying a home is a possibility for many. Auto sales are also increasing, with both automotive and housing improvements resulting in more jobs.
“The economy will slow down,” he said. “Retail spending will be higher, but not as much hiring.”
Interest rates will “probably have to go up some, maybe a quarter of a point at a time.”
Pittsburgh is one of three cities in the country that is officially out of the recession, and one of six cities in North America. The others in the United States are municipalities in the mid-West and another in Nebraska, due to the oil industry.
And as for oil, the U.S. is becoming more independent, relying less on imported oil, and is holding huge oil reserves, Applegate said. He predicted gasoline prices will rise again, before falling in 2013.