Matt, the labor market's very strong right now. Do you think it's going to continue to be strong or do you think it's going to start to weaken going into 2019?
That's a good question. I think that we may have seen, or we may be close to, the peak of the labor market, or at least, to put it another way, the low point in unemployment. So what's really important to watch here is as we get new data in on the labor market, if the unemployment rate starts to tick up that will affect consumer spending, it will affect consumers' willingness to take on debt which will affect bigger ticket item purchases, it will affect more short-term discretionary purchases. Consumers tend to spend more money on things they need and less money on things they just want when their income picture is a little less certain.
As consumer spending possibly slows, that indicates that business investment and business activity is also going to moderate. So our portfolio, our investment portfolio, could see equity returns start to come down with that situation, would you agree to that?
Well I think you're right, and I also think that again, the various sectors will be impacted differently. For instance, consumers still tend to spend money on health care, even though the economy may be slowing down. They still tend to spend money on basic needs, they still spend money on utilities. They spend less money on discretionary purchases. So it does affect the overall level of the market, but it also affects sectors differently.
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So technology, even though it's a cyclical sector which means it's tied closely to the business cycle, will continue to do well or not?
I'm a big fan of technology, I love technology because it invents its own growth. So I think technology is one of those areas that continues to benefit whether the economy is doing exceptionally well or when it starts to slow down. In fact, I think there's some evidence to suggest that businesses tend to spend more on technology when the economy starts to slow because they're trying to increase their profit margins.
So even in a slower economy, revenue in technology should hold up?
Well, I think so. Don, thanks again for joining me today. For more information on these kinds of topics, see our other videos at OldNational.com.
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