ECONOMIC UPDATE SAGINAW VALLEY CHAPTER OF THE

INSTITUTE OF MANAGEMENT ACCOUNTANTS

FEBRUARY 17, 2020

PRESENTED BY: JONATHAN M. GARDEY, MBA, CFA®, CFP®

PRESIDENT AND CEO

GARDEY FINANCIAL ADVISORS, INC.

AGENDA

Introduction

Michigan Economy

Employment

Debt

Housing

Inflation

Interest Rates

Economy

Economic Forecast

Stock Market

Retirement

Questions

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ABOUT GARDEY FINANCIAL ADVISORS

Founded in 1985

Fee-Only Registered Investment Advisors with the United States Securities & Exchange Commission

National Association of Personal Financial Advisors (NAPFA) Member

Staff of two Certified Financial Planner® professionals and one Chartered Financial Analyst ®

300 years of Combined Financial Experience

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INTRODUCTION

Jonathan (Jon) M. Gardey, MBA, CFP®, CFA®

Before he joined the firm in 1993, Jon learned leadership, discipline, and responsibility from six years in the US Navy. Jon served on an aircraft carrier in the Indian Ocean and was Chief Engineer on a high-speed hydrofoil in the Caribbean.

Prior to his Naval service, Jon’s academic career began at the University of Wisconsin. When he returned from the Navy, he continued his studies and earned a MBA in both Finance and Money and Financial Markets from Columbia University in the City of New York.

Following a successful military service career and graduate studies, Jon pursued a career in finance and gained the designations of Chartered Financial Analyst (CFA®) charterholder and Certified Financial Planner™ (CFP®) professional. This knowledge and years of experience has made Jon a valuable team player as well as a leader and trusted professional.

In his 25+ year career with Gardey Financial Advisors, Jon has worn and continues to wear many hats. In addition to his duties as President and CEO, he is also a Financial Advisor, the Director of Research, and Chairman of the Investment Committee.

Jon brings his knowledge, experience and leadership skills to a number of key institutions in his field and he is also an active member of his community. He is a Past-President of the Northeastern Michigan Estate Planning Council, a member advisor of the National Association of Personal Financial Advisors (NAPFA), the CFA Institute, and the CFA Society of Detroit. Jon is a member of the Board of Directors at financial, educational, and private enterprises, including Covenant Healthcare System, Delta College Endowment Fund Investment Advisory Committee, Stevens Center for Family Business at Saginaw Valley State University, and Central Equity Investments Incorporated.

Jon lives in Thomas Township with his wife and two son’s. He also has two daughters. His oldest daughter is married and has a career as a Medical Laboratory Technician and his other daughter is a senior at Central Michigan University. He enjoys spending time with his children and others, serving as Treasurer of his son’s Boy Scout Troop, is an assistant coach for his youngest son’s football team, and he is a member of the stick crew for the Swan Valley High School Varsity Football Team. In his spare time he has earned a black belt in Tae Kwon Do and enjoys sailing.

Gardey Financial Advisors100 Harrow Lane | Saginaw, MI 48638

T: 800-550-3880 | F: 989-791-4572 www.gardey.com | jgardey@gardey.com

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Source: Research Seminar in Quantitative Economics, The Michigan Economic Forecast, Published Nov. 22, 2019.

1971-2000 numbers are averages

58,000

88,000

-112,000

-77,000-71,000

-17,000-9,000

-53,300-58,500

-105,700

-244,600

37,700

96,400

69,70082,700

67,20084,600

76,100

53,100 55,200

23,300 29,000 25,900

1971-2000

1991-2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020* 2021*

Michigan Job Gains and Losses

*Forecast

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Source: “Michigan population increases for 8th straight year, but remains under 10 million” by Kristi Tanner, Published Dec. 30, 2019. Detroit Free Press, https://www.freep.com/story/news/2019/12/30/michigan-population-2019/2741088001/

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Alcona 6.6 -0.8 Gratiot 3.9 -0.4 Missaukee 4.6 -0.5

Alger 8.6 -0.4 Hillsdale 3.5 -0.3 Monroe 3.1 -0.9

Allegan 2.8 -0.5 Houghton 4.3 -0.5 Montcalm 3.6 -0.5

Alpena 4.3 -0.7 Huron 4.0 -0.4 Montmorency 9.5 -0.6

Antrim 5.0 -1.2 Ingham 2.7 -0.5 Muskegon 3.7 -0.6

Arenac 6.9 -0.3 Ionia 2.8 -0.5 Newaygo 3.8 -0.5

Baraga 6.8 0.5 Iosco 6.1 -0.5 Oakland 2.9 -0.3

Barry 2.9 -0.5 Iron 5.6 -0.3 Oceana 6.0 -0.7

Bay 4.3 -0.2 Isabella 3.5 0.0 Ogemaw 6.9 -0.6

Benzie 5.1 -0.9 Jackson 3.2 -0.6 Ontonagon 7.6 -0.9

Berrien 3.6 -0.7 Kalamazoo 2.7 -0.6 Osceola 3.8 -0.9

Branch 3.3 -0.6 Kalkaska 5.9 -0.4 Oscoda 7.4 0.0

Calhoun 3.5 -0.6 Kent 2.4 -0.4 Otsego 4.5 -0.9

Cass 3.6 -0.7 Keweenaw 7.7 -1.1 Ottawa 2.3 -0.4

Charlevoix 4.6 -0.8 Lake 6.0 -0.8 Presque Isle 8.0 -0.3

Cheboygan 11.8 -1.4 Lapeer 5.4 0.2 Roscommon 7.3 -1.1

Chippewa 6.4 -0.7 Leelanau 3.3 -0.9 Saginaw 4.1 -0.4

Clare 6.1 -0.2 Lenawee 3.0 -0.7 Saint Clair 4.3 -0.2

Clinton 2.5 -0.4 Livingston 2.9 -0.4 Saint Joseph 3.3 -4.7

Crawford 6.0 -0.2 Luce 6.8 -1.0 Sanilac 4.2 0.0

Delta 6.2 0.7 Mackinac 17.0 -0.2 Schoolcraft 7.5 2.6

Dickinson 4.3 0.4 Macomb 3.6 -0.5 Shiawassee 3.8 -0.1

Eaton 2.8 -0.3 Manistee 5.5 -0.8 Tuscola 4.4 -0.7

Emmet 5.8 -0.8 Marquette 4.3 -0.4 Van Buren 4.2 -0.9

Genesee 4.0 -0.6 Mason 5.1 -0.3 Washtenaw 2.2 -0.5

Gladwin 5.6 -0.6 Mecosta 4.3 -0.3 Wayne 4.4 -0.6

Gogebic 4.8 -0.5 Menominee 5.0 0.9 Wexford 4.1 -0.5

Grand Traverse 3.2 -0.6 Midland 3.3 -0.5

Michigan Unemployment Rate (%) By County: December 2019

Displayed: Increase/Decrease from December 2018

Source: Michigan DTMB, Bureau of Labor Market Information and Strategic Initiatives, Local Area Unemployment Statistics (LAUS) (All estimates are preliminary. Data is not seasonally adjusted.) http://milmi.org/datasearch/county-labor-force.aspx

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Unemployment Rates by County: December 2019

Source: Michigan DTMB Bureau of Labor Market Information and Strategic Initiatives, Local Area Unemployment Statistics, http://milmi.org/, Data is not seasonally adjusted.

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Source: “Some highlights of the most recent RSQE Michigan forecast” by Gabriel Ehrlich, George Fulton, and Saul Hymans. Published Nov. 22, 2019, University of Michigan, Ann Arbor: Department of Economics

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Source: FRED (Federal Reserve Bank of St. Louis), Leading Index for Michigan, Updated on Feb. 4, 2020 https://fred.stlouisfed.org/series/MISLIND?cid=27304

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Source: “Comerica Bank’s Michigan Index Ticks Down” by Robert A. Dye, Ph.D. and Daniel Sanabria, Published Jan. 30, 2020. https://www.comerica.com/content/dam/comerica/en/insights/assets/economic-commentaries/2020/jan-01/MI_Index_0120.pdf

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Source: U.S. News “Overview of Michigan” https://www.usnews.com/news/best-states/michigan

Michigan Rankings

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Source: “Vehicle Sales Per Capita: Our Latest Look at the Long-Term Trend” by Jill Mislinski, Published Feb. 4, 2020, https://www.advisorperspectives.com/dshort/updates/2020/02/04/vehicle-sales-per-capita-our-latest-look-at-the-long-term-trend

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Source: “Vehicle Sales Per Capita: Our Latest Look at the Long-Term Trend” by Jill Mislinski, Published Feb. 4, 2020, Advisor Perspectives, https://www.advisorperspectives.com/dshort/updates/2020/02/04/vehicle-sales-per-capita-our-latest-look-at-the-long-term-trend

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Source: “Michigan Growth Subdued in 2020” by Robert A. Dye, Ph.D. and Daniel Sanabria, Published Feb. 13, 2020. https://www.comerica.com/content/dam/comerica/en/insights/assets/economic-commentaries/2020/feb-02/MI_Outlook_0220.pdf

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Source: “Michigan Growth Subdued in 2020” by Robert A. Dye, Ph.D. and Daniel Sanabria, Published Feb. 13, 2020. https://www.comerica.com/content/dam/comerica/en/insights/assets/economic-commentaries/2020/feb-02/MI_Outlook_0220.pdf

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Source: “U.S. Workforce Recovery” by Jill Mislinski, Published Feb. 11, 2020. Advisor Perspectives, https://www.advisorperspectives.com/dshort/updates/2020/02/11/u-s-workforce-recovery

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Source: “U.S. Workforce Recovery” by Jill Mislinski, Published Feb. 11, 2020. Advisor Perspectives, https://www.advisorperspectives.com/dshort/updates/2020/02/11/u-s-workforce-recovery

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Source: “U.S. Workforce Recovery” by Jill Mislinski, Published Feb. 11, 2020. Advisor Perspectives, https://www.advisorperspectives.com/dshort/updates/2020/02/11/u-s-workforce-recovery

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Source: “U.S. Household Debt Exceeds $14 Trillion for the First Time” by Alex Tanzi, Published Feb. 11, 2020. Yahoo Finance, https://finance.yahoo.com/news/u-household-debt-exceeds-14-160303784.html

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Source: “Student Loan Debt Statistics In 2020: A Record $1.6 Trillion” by Zack Friedman, Published Feb. 3, 2020. Forbes, https://www.forbes.com/sites/zackfriedman/2020/02/03/student-loan-debt-statistics/#46b0ebbc281f

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Source: “Student Loan Debt Statistics In 2020: A Record $1.6 Trillion” by Zack Friedman, Published Feb. 3, 2020. Forbes, https://www.forbes.com/sites/zackfriedman/2020/02/03/student-loan-debt-statistics/#46b0ebbc281f

High Student Loan Debt States & Low Student Loan Debt States

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Source: “Credit-Card Debt in U.S. Rises to Record $930 Billion” by Yuka Hayashi, Published Feb. 12, 2020. The Wall Street Journal

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Source: “Powell Admits "Low Rates Are Not A Choice Any More", Says QE Will Be Used In Next Downturn” by Tyler Durden, Published Feb. 12, 2020. Zero Hedge, https://www.zerohedge.com/markets/powell-admits-low-rates-are-not-choice-any-more-says-qe-will-be-used-next-downturn

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Source: “U.S. National Debt Will Rise to 98% of GDP by 2030”, CBO Projects, by Richard Rubin, Published Jan. 29, 2020, The Wall Street Journal

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Source: “CBO Projects Budget Deficit Surpassing $1 Trillion This Year, Sees US Debt Growing Exponentially After”, by Tyler Durden, Published Jan. 28, 2020, https://www.zerohedge.com/economics/cbo-projects-budget-deficit-surpassing-1-trillion-year-sees-us-debt-growing-exponentially

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Source: “CBO Projects Budget Deficit Surpassing $1 Trillion This Year, Sees US Debt Growing Exponentially After”, by Tyler Durden, Published Jan. 28, 2020, https://www.zerohedge.com/economics/cbo-projects-budget-deficit-surpassing-1-trillion-year-sees-us-debt-growing-exponentially

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Source: J.P. Morgan Asset Management, Guide to the Markets® U.S. Published Dec. 31, 2019. https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets

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Source: “Powell Admits "Low Rates Are Not A Choice Any More", Says QE Will Be Used In Next Downturn” by Tyler Durden, Published Feb. 12, 2020. Zero Hedge, https://www.zerohedge.com/markets/powell-admits-low-rates-are-not-choice-any-more-says-qe-will-be-used-next-downturn

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Source: “New Cloud Over Global Growth: Synchronized Housing Slowdown” by Sarah Chaney, Published Feb. 28, 2020, The Wall Street Journal

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Source: “Consumer Price Index: January Headline at 2.49%” by Jill Mislinski, Published Feb. 13, 2020. Advisor Perspectives, https://www.advisorperspectives.com/dshort/updates/2020/02/13/consumer-price-index-january-headline-at-2-49

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Source: J.P. Morgan Asset Management, Guide to the Markets® U.S. Published Dec. 31, 2019. https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets

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Source: J.P. Morgan Asset Management, Guide to the Markets® U.S. Published Dec. 31, 2019. https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets

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Source: “Powell Admits "Low Rates Are Not A Choice Any More", Says QE Will Be Used In Next Downturn” by Tyler Durden, Published Feb. 12, 2020. Zero Hedge, https://www.zerohedge.com/markets/powell-admits-low-rates-are-not-choice-any-more-says-qe-will-be-used-next-downturn

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Source: J.P. Morgan Asset Management, Guide to the Markets® U.S. Published Dec. 31, 2019. https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets

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Source: J.P. Morgan Asset Management, Guide to the Markets® U.S. Published Dec. 31, 2019. https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets

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Source: “The U.S. Economic Outlook for 2020-2021 Executive Summary: November 2019” by Gabriel Ehrlich, George Fulton, and Saul Hymans. Published Nov. 21, 2019. University of Michigan, Ann Arbor: Department of Economics

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Source: J.P. Morgan Asset Management, Guide to the Markets® U.S. Published Dec. 31, 2019. https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets

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Source: J.P. Morgan Asset Management, Guide to the Markets® U.S. Published Dec. 31, 2019. https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets

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Source: J.P. Morgan Asset Management, Guide to the Markets® U.S. Published Dec. 31, 2019. https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets

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Source: J.P. Morgan Asset Management, Guide to the Markets® U.S. Published Dec. 31, 2019. https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets

To obtain a copy of the slides:

Website: www.gardey.com

Thank you!

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