S4-20: Recession Concerns, Discover Merger & Bidenomics Impact on Election 2024

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On this week's episode of Finance Explained, Meghan addressed how we prevent negative economic trends, like layoffs, from spiraling into a recession; the newly announced Discover / Capital One merger and its potential regulatory hurdles; and thoughts on the economic outlook under a second Biden term if he wins Election 2024, aka Bidenomics. Listen below for the full episode or subscribe wherever you get your podcasts to catch a new episode every week, or sign up for my weekly emails to have them come straight to your inbox.

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Economic Cycle and Government Intervention

Meghan, also known as the Family Finance Mom, held a live Q&A session to discuss personal finance, economic, and market news. She addressed a question about the economic cycle, explaining that it's a function of human behavior that leads to recessions. She highlighted the role of government intervention to stimulate the economy, using the example of the Great Recession of 2008, where the government bailed out banks and helped individuals clean up their balance sheets. She also mentioned the use of tools such as stimulus checks and additional unemployment benefits to boost spending and prevent severe economic downturns.

The Fed also has tools to aid in economic recovery. Meghan discussed the importance of cutting interest rates to stimulate the economy and combat inflation. She emphasized that the Federal Reserve's primary mission, as granted by Congress, is to promote a stable price environment and full employment, not to prevent recessions or ensure economic growth. Meghan noted that while layoffs have increased, unemployment remains at record lows and inflation is still high, making it unlikely that the Fed will cut interest rates. She also mentioned the possibility of the Fed taking emergency action if the economic situation worsens.

Meghan discussed the impact of global economic downturns on the United States, highlighting that while the US has tools to mitigate the effects of recessions, they cannot completely prevent them. She emphasized the importance of personal financial preparedness, including having emergency funds and understanding one's budget, to weather economic downturns. Meghan also pointed out that government intervention, such as fiscal stimulus and monetary policy, can aid economic recovery. She ended by promising to share a relevant post for further reading.

Related posts:

What Happens In a Recession: A History of 5 Major Economic Recessions of the Last Century

What Happens During a Recession

Corporate Mergers and Regulations in the Current Economy

Meghan discussed the current surge in corporate merger and acquisition activity, attributing it to the economic environment and higher interest rates. She highlighted that smaller competitors like Capital One and Discover are merging to increase their competitiveness in the market.

She also noted the potential impact of government regulations on these mergers, particularly in light of the current political administration's more pro-regulation stance. Meghan explained that Discover also owns a payments network, which could affect the competition in the credit card market. She concluded by stating that the outcome of the Capital One-Discover merger will depend on how regulators and politicians view it, and its potential impact on transaction processing fees for consumers.

Biden's Second Term and Economic Impacts, aka 'Bidenomics'

Meghan discussed the potential impacts of a potential Biden second term on the economy, emphasizing that economic cycles are often far longer than a single presidency or congressional term. She expressed frustration with politicians who make decisions for short-term economic gain, without considering the potential long-term consequences. She concluded by noting that there are longer-term trends underlying economic indicators like the stock market, GDP, and labor, which need to be considered when making voting decisions.

Meghan discussed her views on the political landscape, focusing on the differences between Republican and Democratic governance. She noted that Republicans tend to be more fiscally conservative and pro-business, preferring a hands-off approach to allow the free market to operate. Democrats, on the other hand, are more likely to support increased regulations and oversight, aiming to protect consumers.

Meghan also pointed out that corruption and bad decision-making can occur in both parties, but she generally believes that most elected officials aim to do what's best for the American people. She emphasized the importance of voters having different points of view, as these differences shape the direction of the country.

Meghan shared her views on the economy and government policies. She advised others to understand not only the preliminary, but secondary, and tertiary impacts of various policies and to assess the candidates' proposals and policy perspectives. Meghan also emphasized the importance of considering the long-term impact of policies, as opposed to the short-term effects. She mentioned that she would provide links to posts she has written about recessions, their triggers, and recoveries, as well as a post from four years ago comparing economic data across different administrations.

Related post:

Economy and Politics: 10+ Talking Points Neither Party Will Give You

Earnings, Volatility, and Election Data Impacts

Meghan discussed the anticipation of a major earnings announcement and its potential impact on the market dynamics. She provided an overview of the Q4 earnings season, noting weak earnings growth in 2023 and negative outlooks from two-thirds of companies providing guidance, which is contributing to market volatility. Meghan also mentioned the impact of worsening earning expectations and delays in interest rate cuts on the market. Furthermore, she highlighted the upcoming election cycle and the potential uncertainty it could bring to the economic environment. Meghan promised to be more active in the coming week and invited everyone to the next live Q&A session on the following Wednesday.

To catch all episodes of Finance Explained, be sure to visit the Finance Explained podcast home page and subscribe wherever you get your podcasts to never miss an episode. Have a question you'd like Meghan to answer on Finance Explained? Look for the question box in her Instagram stories every Tuesday night, or you can also now record a question for her to answer on the podcast. Keep your questions coming - they help all Family Finance Moms continue to build their financial literacy and make us all financially smarter!

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About Meghan

Meghan spent nearly a decade as a Financial Analyst, before spending the last 7+ as a SAHM to three little ones. She shares simple money tips for moms to help your family reach your financial goals by building a financial plan you can LIVE with! You can learn more about her background in finance, catch her daily on Instagram and Facebook, and her weekly live discussions in her community for Family Finance Moms.

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