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Bow-tie economist Elliot Eisenberg gets rave reviews at Cleveland Member Connect Summit

Plus a bit about the behavior of the Federal Reserve Bank

There’s nothing funny about the current state of our economy. Or is there?

Comedy and economics may seem like polar opposites, but Elliot Eisenberg, a nationally acclaimed economist and public speaker, weaves the two together seamlessly in his presentations.

A featured speaker at our recent Member Connect Summit in Cleveland, Eisenberg first realized that being a “funny economist” could be a legitimate career path when he was teaching classes at Syracuse University back in the 90s. His classes were always full because he simultaneously made economics fun, relevant, and educational.

“My classes became so popular that there was a wait list,” says Eisenberg. “That’s when I thought to myself that I could really turn the popularity of the delivery of my content into a new career.”

And that’s just what he did. Now chief economist at Graphs and Laughs, LLC, an economic consultancy that serves a variety of clients across the U.S., Eisenberg has made a career of peppering an often dry and difficult-to-understand subject with humorous commentary. And he keeps the audience laughing from start to finish with his witty comments and high-energy style.

“Elliot was a hoot yet very insightful at the same time,” said several members when asked what they liked most about the Cleveland Summit. “His energy and humor is terrific.”

So what’s up with the economy?

Eisenberg started the humor right off the bat with the title of his presentation, “The Economic Forecast: Don’t Vote the Economy Off the Island Yet!” Based on his analysis of the data, he believes the economy is improving, and no recession is on the horizon because of what the following equation, which always holds true, tells us:

GDP = C + I + G + (X-M)

  • C: Consumption by households (doing great)
  • I: Investments by corporations in equipment and plants/factories/land (not doing great)
  • G: Government spending (marginally on the plus side)
  • X – M: Exports (net) minus imports (very lousy)

Of course, not all of these elements are equally sized, but they are all important components of interpreting what the economy is telling us.

Elliot then analyzed the state of the economy with more than 70 detailed graphs grouped into five topical categories, including labor markets, wage growth, inflation, and housing, all the while keeping the audience engaged, and yes, laughing.

And what’s up with interest rates?

Nothing, apparently. Elliot’s analysis of the behavior of the Federal Reserve Bank was particularly interesting (and timely) because the Fed decided on the very same day as the Cleveland Summit not to increase the bank's key interest rate.

Economists and investors expected this decision, and Elliot predicts that the Fed will only raise rates slowly. Below are his predictions (from his presentation at the Summit):

Federal Reserve behavior: Lower and slower for longer

  • Fed Funds is now at 0.375%
  • By 12/31/16: 0.625%. (30-yr @3.5%) (66% Prob.)
  • By 12/31/17: 1.125%. (30-yr @3.8%)
  • By 12/31/18: 1.875%
  • By 2019/20 FF hit 2.9%, the neutral rate

Elliot also demonstrated the weak relationship between Fed Funds and 30-year mortgage rates with the following chart:

This graph shows that even a small rise in the Fed Funds rate will not substantially impact 30-year mortgage rates. And, this is not surprising because the Fed Funds rate is a short-term/overnight borrowing rate. Therefore, there really should not be a strong correlation between these two rates anyway. Bottom line: Don’t worry about it.

What about the upcoming elections?

And, of course, it’s a general-election year, which means there are additional considerations:

  • Republicans should hold their majority in the House.
  • Republicans may lose the Senate as they hold a 54 to 46 seat majority, but have 24 seats up for reelection.
  • Five Republican seats are in play: IL, WI, IN, NH, PA
  • One Democratic seat in play: NV
  • Five of seven political-science models show a Clinton win.

So what are the implications of all of this? Right now, the markets currently expect a Clinton victory, which was augmented by the recent debate. Gold prices came down, the Mexican peso came up – indications there will be a Clinton win. Based on this, if nothing changes, the markets will consider the election a non-event.

And you won’t have long to wait to find out if this analysis comes true.

Elliot offers a daily, 70-word economics email that he invited members to subscribe to at the end of his presentation. If you weren’t at the Cleveland Summit and would like to learn more about Elliot or subscribe to his daily email, use the contact information below:

Stay tuned for additional articles featuring the speakers at this year’s Member Connect Summits.