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'We can't expect the Fed to save the entire planet': Walser Wealth Management President on U.S. economic recovery

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Walser Wealth Management President Rebecca Walser joined Yahoo Finance Live to break down where she sees the U.S. at the the end of 2021.

Video Transcript

ADAM SHAPIRO: With 25 minutes to the closing bell, we've got the reaction, at least in the markets, to what Fed president from Philadelphia, Patrick Harker, said about inflation in the GDP. And to help us break it down, we invite into the stream Rebecca Walser, who is Walser Wealth Management president. It's good to have you here. And there were a couple of headlines--


ADAM SHAPIRO: --from Brian Cheung's interview with President Harker. And for instance, he is predicting-- the Fed is predicting, but he's predicting GDP growth for the full year about 3% to 4%, with unemployment around 5% at year end. Do you think he's under predicting where we're actually going to wind up?

REBECCA WALSER: No, I wish I didn't, Adam. But yes, I do. I mean, you know, and it's not the Fed's fault, right? We're expecting them to do too much. They cannot save the entire planet, and certainly not United States. And I just think that we have to realize that, you know, a true recovery means a reopening and getting back to some level of normalcy, whatever and however that's defined at this time, Adam.

But to keep relying on the Fed to stimulate us out of this virus, you know, repercussions and ramifications, it's not going to go well. We are starting to see it now. We're seeing the steepest yield curve, as you know, in many, many months. And we're starting to see inflationary pressure. We're starting to see it in food and gas. And let's remember, Adam, that Americans don't look at modified CPI when they see that gas costs more and food costs more.

SEANA SMITH: Well, and Rebecca, I want to ask you a little bit more about that because we can clearly see that higher rates, potential for inflation, spooking markets a bit today. Yet we just heard from President Harker, he was saying that inflation, he doesn't see inflation as a risk at this point. I guess, what's your assessment? And I guess, how big of a risk do you see it right now?

REBECCA WALSER: It is a risk, and is it the ultimate risk? I don't think so. But it only is not going to be a risk if we have a plan to get back to economy growing, and get organic growth. I mean, you have to look at how many states are really still shut down. You to look at how many industries are really still shut down. We aren't going back on the boats. We're not going to business conferences. We don't have travel back.

And I don't expect that it will ever come back maybe necessarily to the way it has been. But we can expect a three-year period of time, a 36-month period of time, to just get back to sort of where we are getting to some sort of level of normalcy. Because that's putting too much pressure on the Fed to fix everything when the problem is, people need to get back out to work and get back to their jobs. And they need to travel again, and we need to spend money.

We're a 70% consumer-driven economy. So when we're not consuming because we're sitting at home, or our businesses are closing, or our vents are shut down, we're relying on the Fed to do the consumer spending for us by pumping money into the economy. And that just doesn't work out in the long run, even though there's this push now that we can stimulate forever, and there'll be no economic impact. I just completely disagree with that.

ADAM SHAPIRO: Well, I think what President Harker was saying, though, is, yeah, they're anticipating, in his numbers, $900 billion stimulus. It's going to perhaps be higher than that. That's in the Senate right now. But when you say the economy-- and we all agree-- needs to open up, I mean, we're seeing tremendous spending.

Target-- digital sales at Target up 118% we learned in the fourth quarter. The outlook for Target, they didn't give us guidance, but they're going to be upgrading 200 of their brick and mortar stores. They're opening 40 more stores this year. It sounds to me like you're not in agreement with what some of the major retailers in the country are showing us.

REBECCA WALSER: No, and I don't disagree with Target. I mean, I want this, right? I want great news. I want great-- I want Target to be successful. I want the market to be successful. I'm just saying, Adam, that as the government changes the CPIs that they analyze and they say we don't have an inflation problem, but yet the consumer actually sees that energy costs are rising and food costs are rising, and they're seeing a different number, I mean, no offense to President Harker-- I respect him immensely-- but I am saying that we have a disconnect between federal government official numbers that they are targeting and utilizing versus what the average American looks like in their pocketbook.

And I do think that the stimulus is absolutely necessary. I'm just saying that this is not a long-term strategy. And remember now, we've already been doing this since March of last year. So we're at a year now already. And what's more important not for the Fed, but really, for this administration, to come out with is a real true plan about opening up the economy. What are they going to do to really facilitate the reopening of the economy? That's really what's more important, I think, here because rely on the Fed to be our scapegoat, it can work for a while, and it has, but certainly not indefinitely.

SEANA SMITH: Rebecca, we only have about 30 seconds here. But real quick, then the big question is, what do investors do right now? What are you recommending?

REBECCA WALSER: Well, I mean, tech is not where it's at right now. I mean, tech obviously had a huge benefit windfall, I would say a push because they were so much more relevant last year, and we really realized how much big tech we use. And I'm talking about, obviously, things that allow us to work remotely was a really big windfall. But right now, we're seeing a pull away, and that's why, obviously, the Dow is doing better than the S&P and the NASDAQ.

And so, I think investors need to be prepared for volatility. I still see that we're going to have a positive year as well. But I do think we're in for some volatility until we can really get this figured out on how the economy is going to get back to some level of normalization with the virus. So, overall, a good year. But it is going to be rough for a little bit of time in this year for sure.

ADAM SHAPIRO: And Rebecca, your advice is countered with that plaque behind you, which says never let go of the dream in your heart. Rebecca Walser is Walser Wealth Management president. We appreciate your being here.