Double Dip Recession?

The economy’s sluggish rebound is still topping financial news. Consumer spending is flat, unemployment is up, and as I’m writing this the Dow is down.

What are we to conclude from these trends? Will we continue to slowly make headway, or will we lurch backwards into a double-dip recession?

These are certainly interesting questions, and the one thing that we know for sure is that there are no shortages of opinions on this subject.

The truth of the matter is that sometimes we need to get worse before we can get better. We have been addicted to debt and leverage for too long, and we are having to slowly ween ourselves off it as we adjust to a life of not being able to keep pace with the Jones’. Our society is “deleveraging,” which means many people are selling assets to reduce debt.

It is painful to go through, but the result is a happier citizen whose monthly note isn’t so overwhelming anymore.

I find that most of us can go through our homes and find a slew of things we regret having purchased. Recessions are about cleaning out old drawers and selling the things that we do not really need.

On a macro level it is much the same. Just as we are forced to analyze which expenses are truly discretionary and which ones are not, corporations find themselves in a similar situation. Since labor costs make up such a large component of corporate expenses the downsizing of labor forces is a typical side effect.

While workers are forced to adapt in an ever-changing economic envoironment, consumers benefit from the cost savings this provides to essential products and services.

Our economy is going through a renewal process. Companies are typically the first to adjust, and workers follow in suit. The process may be painful, but America always comes through on top – and this time will be no different.

Knowing where you're going

You have likely encountered companies that provide easy ways to grade investments using various ranking systems. While the convenience of these services appeals to many people, I just finished reading a white paper by Thomas Huebscher, Phd that should cause investors to think twice before relying on such ratings. One popular company claims that their research models provide a quick summary as to which investments are worth keeping, but Huebscher’s study revealed that this ranking system was actually a terrible predictor of a given investment’s future performance.

The investing public clamors for help in making sense of today’s seemingly nonsensical financial world. Companies naturally capitalize on this demand, but they fail to deliver for one reason. They are not forward thinking. We would never dream of navigating our cars by only looking through the rear view mirror, but many people do not think twice about parking their money in whatever vehicle seemed “safe” or profitable yesterday. There is something about money that makes reasonable people behave in ways they never would otherwise.

Since ranking systems have proven unreliable, here is some advice you can count on. Learn from the past so as not to repeat mistakes, but be sure to look forward when planning for the future.

It's all about perspective

It seems as though the news cycle this past month has been filled with one bleak story after another. Last week, according to some government figures, BP’s oil leak surpassed all previous spills to become the largest ever in the Gulf of Mexico. Even the lowest estimates say that at least 70 million gallons of oil are now in the Gulf, and the amount continues to climb every day. The long-term environmental effects of the spill are still unclear, but the hardships it has wrought on our region are only too obvious.

Unfortunately, recent predictions about the health of the national economy are not much brighter. Key indicators suggest that the recovery is slowing, and economists fear a double-dip recession. New jobless claims were higher than expected, and the housing sector is suffering now that the homebuyer tax credit has expired. While some politicians are calling for additional stimulus spending, others are concerned about the ballooning deficit. Meanwhile unemployment benefits for millions of laid off workers have ended, and many others fear for the security of their jobs. Consumer confidence has dropped considerably in June meaning consumer spending is likely to remain low in the coming months. Traders watch for every morsel of information, so even seemingly insignificant news can bring a reaction in the stock market. With so much uncertainty, it is more important than ever to focus on the fundamentals to avoid making unwise, impulsive decisions.

With so many gloomy forecasts, I would like to take a moment to consider the positive. As demonstrated time and time again, in Louisiana we know how to weather a storm. We have the resiliency to survive whatever catastrophes come our way and emerge from the wreckage stronger than ever. Historically the economy is cyclical. Eventually it will likely improve, I believe the financial markets will stabilize, and those individuals who followed a disciplined financial strategy will reap the benefits. Hopefully they also will have gained some wisdom and fortitude to withstand the next downturn with even more confidence.

Fortier president wins national award

SAN DIEGO, CA – May 5, 2010 –Brad Fortier, CFP®, president of Fortier Financial, was presented the Charlie Eisenmann Client First Award by Dunham & Associates Investment Counsel, Inc. during a ceremony today.

The national award is given annually to the investment professional who works with clients in a manner that best exemplifies Charlie Eisenmann’s client first philosophy. Mr. Eisenmann, the former Chief Operating Officer of Dunham & Associates, died in March 2007 after battling cancer.

Mr. Fortier received the award for his dedication to his clients in the wake of Hurricane Katrina. He set up a temporary office in his home to help clients through the crisis and went well beyond what would have been professionally expected to assist in many other areas of their lives.

Jeffrey A. Dunham, founder and CEO of Dunham & Associates Investment Counsel, Inc., presented the award during the 2010 Dunham Institute at the Lodge at Torrey Pines in La Jolla, California. Mr. Fortier is an independent Financial Advisor with LPL Financial in the Greater New Orleans Area and was chosen by the Dunham & Associates award selection committee.

The event’s keynote address was made by Nobel Laureate in Economics Dr. Harry Markowitz.

"Brad Fortier represents a client first attitude that is both unwavering and focused on his clients' needs,” said Jeffrey A. Dunham. “Like Charlie, Brad demonstrates the noble pursuit of genuine service to his clients. This was magnified when confronted with Hurricane Katrina but is also evident when working with his clients in the more normal circumstances of everyday life.”

Brad is also a prominant community leader in the recovery of New Orleans. He served as the president of the Lakeview Civic Improvement Association, the director of capital development for the Beacon of Hope Resource Center, the chairman of the Finance Committee for the District 5 Neighborhood Recovery Group, and on the District A President’s Council, which was established to advise on the city’s budget process.

“We received many deserving nominations from around the country, which made our selection challenging,” noted Salvatore M. Capizzi, Chief Sales & Marketing Officer of Dunham & Associates Investment Counsel Inc. “In the end, we felt Brad's exemplary client first service philosophy and his dedication to community service are the attributes that would best carry on Charlie Eisenmann's legacy. We are honored to recognize Brad for this year's award."

“I am honored to accept this award for client service, which is at the center of my business philosophy,” said Fortier. “Financial planning is a means to an end. Helping my clients realize their dreams is really what I do; it’s what drives me. That is why I take a holistic approach to finance that extends far beyond a person’s portfolio to really get at the heart of what they want to achieve.”

About Fortier Financial
Fortier Financial is one of the most highly regarded wealth management specialty boutiques in the Gulf region. The name has become synonymous with professionalism and trust, which is why Fortier Financial's exclusive clientele consists mainly of successful professionals seeking a high level of personalized advice. Despite the firm's growth, it continues to deliver one of a kind customer service that addresses the needs of each client on an individual level. To maintain this key strength, Fortier Financial limits the number of new clients taken on and is selective when choosing who it serves based on criteria that extend beyond the size of portfolios.

Fortier Financial is independently owned and operated. It is a branch office of one of the nation’s leading diversified financial services companies and the largest independent broker/dealer in the nation.* Through LPL Financial, Fortier Financial is able to offer access to a wide variety of products and services, all of which can be tailored to suit clients’ specific needs.

*As reported in Financial Planning magazine 1996-2009, based on total revenues.

Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC

Statement on Mayor Nagin's Budget Briefing

If an operation finds itself spending more money than it makes, then the choices are really quite simple: make more or spend less. The City's lack of any real economic development has forced us to spend less, which translates to cutting city services.

The City's current situation is the result of three primary factors:

1. City expenses exceed revenue – The City is rebuilding in its pre-storm footprint with smaller population and tax-base.
2. National Recession - Contrary to local perception and the Nagin administration’s characterization of New Orleans as a “great place to ride out a recession,” we are seeing that the City is not immune to the effects of a national recession.
3. Debt - Various expenses, such as recent legal settlements and FEMA reimbursement costs, are overwhelming the already stretched budget.

One of the shortcomings to surviving in a perpetually depressed economic state is illustrated in our significant dependence on sales tax revenue to financially operate each year. This is largely attributable to the City’s primarily tourism based economy. New Orleans remains vulnerable to variables that deter business and consumer travel such as national recessions, incidents of terrorism, and rising costs resulting from inflation (primarily transportation related commodity prices, namely oil).
In addition, the recession’s effect on the financial markets has forced the city to add substantial amounts of new money, public tax dollars, to the city pension to keep it in compliance with governmental regulations. The City is confronted with the same challenges many private citizens are facing in light of the drop in value of their personal retirement accounts over the past year. Governmental rules dictate that governments use tax dollars to bring account balances up to arbitrarily defined levels to remain in compliance and avoid hefty fines and the potential loss of critical tax advantages. These untimely expenses, as well as the corresponding rising costs of employee health benefits being paid by the city are contributing to a large part of the deficit.

It is also important to note that many, if not all, of the City’s capital projects are being funded by federal disaster money, which has been fully allocated. This means that the current practice of tapping into these funds to meet general operational expenses can not continue.

If at some point in the future city government concludes that it can no longer cut vital city services it will then forced to create more revenue, which translates to raising taxes. Potential tax increases will directly be related to the level of economic growth we are able to achieve locally. This is precisely why economic growth is so vital to our long-term recovery.

Although the message at times seems bleak, there are many things to be optimistic this New Year as we take stock of what we have accomplished together. All we need to do is realize that everything required to ensure a secure and prosperous future in this magnificent city is not only already here, but clearly exemplified in each and every one of the hard working citizens who call New Orleans home.

The inevitable multicultural prosperity that awaits the people of New Orleans requires nothing more than our recognition that we all prosper from a growing economy. It cures everything from our roads to the grassy coast that stands guard over our fragile existence in this place.

New Orleans’ City Budget: What it Means to You

In light of the projected $68 million 2010 budget deficit, the Lakeview Civic Improvement Association (LCIA) hosted a town hall discussion entitled, “New Orleans’ City Budget: What it Means to You” on Saturday, November 14, to provide insight into our city’s upcoming fiscal and redevelopment challenges. Councilmembers Arnie Fielkow and Shelley Midura and LCIA board members presented at this meeting. As President of the LCIA, I believe that it is our duty to facilitate issue driven discussions to ensure that our community's needs are reflected in the city’s plan for recovery. It continues to be a pleasure to work with the city’s leadership and lend my perspective as a CERTIFIED FINANCIAL PLANNER™ Practitioner. as we work together to reach economic stability. Learn more about Saturday’s meeting and New Orleans' recovery challenges by reading the article published by the Times-Picayune below.

Red tape choking N.O., citizens lament
Lakeview addresses city's troubles
Sunday, November 15, 2009
By Katy Reckdahl
Times Picayune Staff writer

Community leaders in Lake-view maintain house-by-house data on the status of blight, demolition and rebuilding efforts in the neighborhood. They keep track of every new business that opens. And they have the ear of public officials, several of whom showed up early Saturday morning for a meeting of the Lakeview Civic Improvement Association.

But four years after a wall of water virtually obliterated their section of New Orleans, much remains to be done. And it seems every bit of progress is hard-won, especially when it involves the City Hall bureaucracy.

City Councilwoman Shelley Midura, Councilman Arnie Fielkow and state Sen. Ed Murray, who is running for mayor, met Saturday with about 50 residents to discuss the city's projected budget shortfall, the future of the Recreation Department and the blight that still chokes many Lakeview properties despite efforts to force owners to clean up their property.
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Brad Fortier, the association's president, implored attendees to take a metaphorical battering ram to what he called "this castle of dysfunction that has been the city of New Orleans," though fighting the system continues to prove challenging.

As has been common citywide since Hurricane Katrina, Lakeview residents are still trying to rebuild from the grass roots.

Fortier's 15-member board of directors on Saturday filled three tables in the St. Dominic School gymnasium. The group's Web site lists roughly 100 volunteers who make up a dozen or so committees. Still others lead neighborhood business groups, an outdoor market and "Holidays on Harrison," an annual gathering complete with Santa and trolley rides.

Some signs of progress are visible. Construction of a new Edward Hynes Charter School and a new public library is slated to begin in January. Harrison Avenue, the area's main commercial drag, is being repaved. Even the gaping holes in the post office driveway are almost history, pending a final cement lip.

Still, the city last month held 200 blight hearings involving Lakeview properties, all of them observed by someone from the civic group.

And although neighbors reported that demolitions have finally begun in earnest, only 36 of the roughly 600 condemned Lakeview properties sold to the Road Home program were torn down last month. Another 172 are scheduled to be torn down within next few months. Fully half of them have been labeled "high priority" by neighbors, said Pamela Danner of CDM Inc., a city demolition vendor.

The remaining sites are waiting for demolition approval from the New Orleans Redevelopment Authority, which receives Road Home properties in New Orleans.

The civic association has been working closely with NORA and hopes to sell all of its Lakeview properties within a year. But even though the group has a roster of 165 interested buyers, it won't get a list of available properties from NORA until the end of the year, said Todd Wallace, who oversees a neighborhood committee devoted to the issue.

The delay offers another example of how residents' efforts can get mired in bureaucracy. Still, neighbors try to focus on the positive.

The Greater New Orleans Community Data Center reported in June that about half of all pre-Katrina households in Lakeview were again actively receiving mail.

And Wallace, for one, said he is hopeful about the next round of NORA homes to be sold.

"Maybe we'll get neighbors back from the north shore," he said.

Katy Reckdahl can be reached at kreckdahl@timespicayune.com or 504.826.3396.

Champion of personal freedom: a letter to the editor

As New Orleans moves towards the 2010 mayoral race, rebuilding a sustainable community remains the top priority. In light of this, it is important that the community understands the costs associated with policy decisions affecting the city’s rebirth. Read more in my letter to the New Orleans Times Picayune editor.

Champion of personal freedom: a letter to the editor
By Letters to the Editor
November 03, 2009, 1:20AM

Should freedom and liberty be regulated by central planners in government?

"No way," say most level-headed Americans. Yet that is exactly the opposite opinion shared by many people of New Orleans, who likely consider themselves conservatives.

New Orleans Mayor Ray Nagin's decision to allow the city to rebuild in its pre-storm footprint serves as one of those rare examples where a liberal politician seeking self-preservation, i.e. re-election, actually promoted the most fundamental of traditional conservative values.

I believe allowing residents to rebuild unregulated or steered by central planning government was the ultimate example of the empowering dynamic of personal liberty. It is up to the people now to collectively contemplate a way in which to pay the costs associated with those decisions, not to second-guess the decision itself.

Liberty and freedom are never free, and the people should embrace the minor costs they impose. They are both as vital to our quality of life as the oxygen in the air that we breathe.

Brad Fortier
Metairie