Elizabeth MacDonald, Stock Market Editor at Fox Business Network (FBN), is no talking head. With a solid background in business news (she worked at both Forbes and the Wall Street Journal before joining Fox), she pulls no punches when assessing what’s happening with the economy. Recognized as one of the top business journalists in the country, she has received many awards, including the Gerald Loeb Award for Distinguished Business Journalism. MacDonald took time from her busy schedule to tell us how she got to where she is and where she thinks the economy is heading.
While this has got to be an exciting time for any reporter covering financial news, the downside of this excitement is that the recession is affecting all of us in a very real and frightening way. What is your best guess as to when we’ll hit the bottom of this recession? Do you agree with President Obama‘s comments about “glimmers” of hope?
We’re not going to hit bottom until 2011 or 2012. Right now, the mania of the bubble that led to all sorts of hysterical blindness – both in Washington and on Wall Street – will continue to have a serious impact on the economy. The bailouts are a faith-based initiative to make the economy and the markets bounce back that may not work.
The “green shoots” theory of a nascent economic turnaround, with glimmers of hope in housing and first quarter earnings, looks more like a “venus flytrap,” at a time when the U.S. GDP has contracted for three consecutive quarters. This is something we’ve not seen since the first quarter of 1975 i.e., two back-to-back GDP downturns of 6%.
This downturn should be taken in the context of a vertiginous bull market that road the backs of two massive bubbles – the dotcom, and an even bigger, more deadly, balloon of a housing bubble. This bull market it’s worth noting gave U.S. households a record net worth.
But the banks are still lurching around in a hospital gown, and the government’s stress tests made it worse, creating market uncertainty and volatility. And, by [the government] telling the banks to refrain from discussing the tests, we’ve gone from a period I’d describe as “don’t ask, don’t tell” to “don’t ask, do sell.”
Meanwhile the bailout costs continue to soar. Do any of your readers believe that either Senator John McCain or President Obama would have won the election on the President’s $3.6 trillion budget that the CBO now says will blow out the deficit to $9.3 trillion by 2019 – more than the present combined GDPs of Britain, Russia, France and Brazil?
I have lots of concerns including the impact of government’s fiscal recklessness (which I should note also occurred under President Bush) and a potential national security issue now that China holds massive amounts of U.S. debt. And, of course, the bailout costs will cause taxes to rise just as inflation socks us. The bailout costs are fast approaching our entire GDP. Now you understand my reason for pessimism.
Is there any one piece of investment advice that you can share with our audience?
Start socking away your money in a decent bond fund with long-term bonds, not short-term debt instruments, which tend to be more volatile, and max out your 401(k). Save, save, save because the U.S. government is deeper into the economy than ever before. And your taxes and costs are going to go up.
It’s important today that teenagers achieve some level of financial literacy. Who do you think is best able to give them a good financial education?
I hope this doesn’t sound too much like a plug, but Fox Business provides great financial coverage, with solid reporting. I’d also encourage kids to start reading the Fox Business website, The Wall Street Journal, Barron’s, Smart Money, Dow Jones news reports, The Financial Times and The Economist. I started reading the business publications at an early age, picking them up to read and loitering in magazine stores. I didn’t have the money, couldn’t afford them. My parents had 8 children.
You have a flourishing career as a business journalist. Who were your role models? How did they encourage you in your career aspirations?
Flourishing, that’s being kind and generous. I’ve been working since I was 15, starting out in a bank. And, I’ve wanted to be a journalist since I was 10 years-old. My role models were my parents and my brothers and sisters. They teased me, fought with me, plus debated me over the dinner table. With the knives, forks, and tempers flaring, it was like lightning bolts were shooting across the table – a great training ground.
Was there any point in your career when you were discouraged?
Sure. I’ve left many a smoking wreck of career crackups behind me. But so what, who cares? I don’t let anyone define who I am—no boss will ever do that.
While retirement is a long way off, what would you like to do in “retirement”?
Read a lot of books. That’s all I do anyway. And, sit on the beach. I love the beach. I’m pretty boring, but I love a good fight.
And, finally Liz, let’s have some fun with Woman Around Town’s Six Questions:
Favorite Place to Shop:
I don’t like shopping. OK, the grocery store.
Favorite Place to Eat:
My local bar restaurant, Henry’s. It’s like the place on the old TV show, Cheers.
Favorite New York Sight:
The Statue of Liberty. Not kidding, I sometimes get teary-eyed.
Favorite New York Moment:
Having cab drivers discuss the stock market, the bailouts, the economy, the White House.
What You Love About New York:
The people. I adore New Yorkers. I love it when tourists come here and are surprised at how wonderful, kind, generous, real and good New Yorkers are. I’m a New Yorker. Born and raised on Long Island. My grandmother was born in Harlem.
What You Hate About New York:
Mothers with strollers walking behind me. I’m always afraid they’re going to clip my ankles and I’ll fall down. I have a habit of tripping on cracks and falling down a lot, reading while walking. Watch for the bruises on my legs next time you see me on camera.