U.S. government officials have revised officially revised their analysis of the nation’s economic growth during the 2nd quarter of 2014, announcing that the economy did better than initially believed.
Yet investment advisor and children’s finance teacher David Smith, of Smith Investment Management, advises caution with people’s economic expectations.
“Be not deceived, God is not mocked, for whatever a man seweth, that shall he also reap” Galatians 6:7
Smith says that “wisdom should tell us some things about the economy, and about finance, as well.”
“Last fall I was teaching finance to about 20 teenagers in a church, and in one of my presentations I held up a kernel of corn, and asked ‘what will happen if you plant this in the ground?’ The kids rightly said that you’d produce more corn with it. I used that illustration to show these young people that indeed, what we plant, is what we harvest. Right now our country is planting a crop of debt, and that debt will not yield the kinds of things that we need or want.”
Smith expressed a level of skepticism about the new, upwardly revised GDP figures, which suggest that the economy grew not at a rate of 4.2% but rather at a rate of 4.6%. “I think sometimes these reports aren’t quite as accurate as we’d like them to be” he stated.
Noting the late economist Simon Kuznets who first discovered how to calculate a nation’s gross national product (GNP), which eventually gave rise to the concept of the “gross domestic product (GDP), Smith stated that
“Kuznets made it clear that his calculation was not supposed to be used as a measure of a nation’s economic wellbeing. Yet that is precisely how the GDP number is treated today by people from Washington to Wall Street. GDP looks at quantity of economic growth, but it doesn’t consider the quality of that growth. If something is fueled by debt, it won’t have the quality that we want under the surface.”
As a means of wise, biblical stewardship over one’s financial resources, Smith recommends a couple of key steps:
• Consider ways to shrink your recurring monthly expenses.
“If you can underspend your monthly income and reduce your debt, you will be in better health, fiscally and otherwise, in the long run.”
• Diversify your investments as a hedge against inflation and future economic turmoil.
“Prayerfully consider having maybe a quarter of your savings in gold, maybe a quarter in high quality stocks, maybe a quarter of it in real estate and a quarter in cash, and then prayerfully reconsider your portfolio, or ‘re-balance’ it, every six months or so”