Economic Forecast: What Awaits Our New President ? SRI Conference 2016 Hyatt Regency-Denver Economic Forecast: What Awaits Our New President ? Mel Miller, CFA Chief Economist, First Affirmative Financial Network

Election Finally Over

Voting Anguish

GDP (Gross Domestic Product) 2016 Fearless Forecast Update thru Sept 2016 By End 2016 GDP (Gross Domestic Product) 1.5% 1.8% - 2.2% Inflation (Core CPI) 2.2% 1.8% Unemployment Rate 5.0% 4.9% Federal Funds Rate 0.50% 0.50% Stock Market Returns 7.83% 6% - 10% Bond Market Returns 5.70% +/- 2%

Economic Problems For President

Wage Disparity

Declining Middle Class Middle Class Share of Wealth By Country DATA SOURCE: 2015 CREDIT SUISSE GLOBAL WEALTH REPORT

Cause of the Declining Middle Class Up 33% Up 8% Down 1% U.S. Bureau of Labor Statistics

Growing Worker/CEO Disparity

CEO’s Not Worried About Inflation

Open to Interpretation

Timeless Political Sayings… “Any American who is prepared to run for president should automatically, by definition, be disqualified from ever doing so” - Gore Vidal “Do you ever get the feeling that the only reason we have elections is to find out if the polls were right?” - Robert Orben “The best thing about this group of candidates is that only one of them can win” - Will Rogers

Econ 101 Basic Formula - Recycled Price Inflation + Long Term Wage Growth = Labor Productivity + Change in Labor Share of Income

Declining Productivity

Productivity Since Recession End

New Not Always Better

Partial Solution-Demand Stimulator

Shrinking Labor Force **

Labor Decline World-Wide Not Just a U.S. Problem

Negative Rates Frustrating FED

Declining Corporate Profits

Weak Business Investment

Over- Extended Stock Market

Overvalued??? Standard & Poor’s

Price to Sales - DANGER DANGER !!!

Rule of 20 Violated

Stock Market Loss Moderator

Technical Investing Technique

Don’t Be A Sheep

Timeless Political Sayings… “Politicians say they're beefing up our economy. Most don't know beef from pork” - Harold Lowman “Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other” - Oscar Ameringer “Democracy is being allowed to vote for the candidate you dislike least” - Robert Byrne

Wisconsin Political Sign

International Problems For President

Growing Arsenal

International Problems For President Euro Breakup - Brexit Turkey/NATO Conflict Ukraine/Russia Conflict China Debt Crisis Syria Humanitarian Crisis Climate Change Disasters And Many Others!

Domestic Problems For President Wage Disparity Aging Population Cyber Attacks! Lack of Business Investment Pension Fund Crisis Shadow Banking Loan Crisis Agriculture Lending Crisis

2017 Economic and Market Forecast

Forecasting Philosophy Fall Seven Times Get Up Eight!

Determination Assumption

Recession Predictors Update Description Economic Trend Business Cycle – Spread Between Junk and Treasury Positive Treasury Curve Slope Neutral to Negative Oil Price Positive to Neutral Leading Economic Indicators Neutral Chicago Fed National Activity Index Neutral to Negative

Recession Probability? *** 20%

GDP (Gross Domestic Product) 2017 Fearless Forecast By End 2017 GDP (Gross Domestic Product) 1.75% - 2.0% Inflation (Core CPI) 2.0% Unemployment Rate 4.9% Federal Funds Rate 1.0% Stock Market Returns -5% - +5% Bond Market Returns - 2% - + 2%

My Life Described

Voting Anguish-Last Word

Have a Great Conference!!! Summary….. Have a Great Conference!!!