Economists can’t see the future. Eugenio Alemán has always known this, but it was especially clear just before the pandemic hit.
“I remember I told my boss, ‘Is there any plan to work from home in case this thing gets really bad?’” Alemán said. “And my boss at the time said, ‘In Washington, D.C.? This is never going to close down.’ So you can see, we are not even close to fortune tellers.”
Be that as it may, Alemán’s views on the future of the economy are very much in demand. Last May, he became chief economist at St. Petersburg Fortune 500 company Raymond James Financial, replacing Scott Brown, who’d held the role since the early ‘90s.
Alemán, 62, came to Raymond James from the U.S. Energy Information Administration, where he also served as chief economist, analyzing energy data in order to inform lawmakers on U.S. policy. Before that, he worked at Wells Fargo in a position not unlike the one he has now, analyzing federal and market trends and data in order to give financial advisors a broad outlook they can share with clients.
“I have learned over the years that I cannot tell anybody what to do with their investments, or what to do with their business, because I don’t know what state they are in,” he said. “The only thing I can do is inform them of what we see in the economy and in the markets, and each one of them will take the information they’re receiving from us, and make their decision as best they can.”
This isn’t the first time Alemán, a native of Argentina, has lived in Florida; he got his doctorate in economics from Florida International University. On a recent call, he talked about the economy of his new home state, the possibility of a soft landing to inflation and more. This conversation has been edited for length and clarity.
How did you end up at Raymond James? Were you looking to get back into the private sector?
No, no, no. I was happy. I was OK with my job at the federal government. One day I received an email through LinkedIn to see if I was interested in hearing about the possibility of the chief economist position, and I said sure. Of course, I never thought that I was going to get it. But I thought, let’s follow this lead, and it worked.
I’m kind of amazed that a proposition like that would come in through LinkedIn, given your role in the government and the size of Raymond James.
It is very interesting. Back in 2004, when Wells Fargo hired me, I sent out a resume through a posting on the internet, which I did not know was from Wells Fargo. It was a blind kind of announcement.
Can you describe the day-to-day job of a chief economist? What’s your information diet?
I read everything there is regarding the economy. We publish almost daily what we call indicators. Anytime a new piece of information comes out, we write a very fast and short report on that indicator, and what we think it means for economic activity and for the economy as a whole. We write from one to five or six indicators per day. And then we publish a weekly (report) every Friday, and we cover a specific topic. Last week we covered the debt ceiling argument.
How often do you find yourself reacting to unexpected news, such as a company like Google laying off 10,000 people in the middle of the night?
I don’t react fast to this type of news. Ten thousand layoffs in a 150-million workforce, it’s 0%. We have to remember that small businesses are the ones that hire the most in the U.S. Yes, Google, Microsoft, Facebook, they make a lot of noise, but they are not the bread and butter of employment margins in the U.S. When the service side of the economy, restaurants and hotels and all those sectors that are actually booming right now, start to have trouble, then I will start getting concerned about it.
Inside Raymond James, how does the company make use of your expertise?
We send all this information to advisors. We are trying to educate them on what these numbers mean for the economy, what might be the reaction of markets. We try to be down to earth, not very technical on it, so our advisors are able to grasp the information and try to help customers as much as they can. Try to make it as simple as possible, but as informative as possible.
Do you feel like you’re a different economist now at Raymond James than you were at Wells Fargo, by virtue of your work in the public sector?
No, I don’t think so. It was a very nice experience for me, because I got a good view of how the process worked within the U.S. government. It wasn’t much different than in the private sector. They were much more concerned, when we wrote something, that it was as independent as possible from the political point of view.
What’s your overall outlook for the year ahead? Do you think we’re headed for a recession?
We think that the Fed is going to (hike interest rates) twice, two more times, with 25 basis points each time, in February and March. And I think that we are going to have a very mild recession — barring any other shock, of course. But the possibility of a soft landing should not be taken off the table. Because while may of the sectors that are susceptible to interest rates are already in recession, the service sector is still not. The restaurant industry, the hospitality industry, even the construction market is still relatively strong, just because the projects that have been put in place are still going on. They’re sectors that are affected, but could potentially keep the economy from going under.
Those happen to be sectors that are pretty important in Florida. Are there any areas in which you see Florida as economically vulnerable?
The housing market is one of the biggest vulnerabilities, just because prices were booming, and the market for potential buyers is shrinking. So we are starting to see some declines in home prices. Because prices were so high, that is probably a vulnerability. Other than that, the tourism industry is booming, because we went two years with COVID limitations, and that sector is still booming. I think that sector is going to continue to expand, and continue to add to the labor pool. So I am more positive on the Florida economy than in the rest of the economy.
When do you think we’ll see another rate cut?
I know the markets see rate cuts at the end of this year. I do not see it yet. Because the Fed has allowed inflation to get much higher above the 2% target, that means that they need to see inflation below 2% for a longer time. I think they are going to stay put for the rest of the year after the two increases in February and March, and then they might start decreasing interest rates in 2024.
Last thing: How did you celebrate Argentina winning the World Cup?
Oh, I’m still celebrating. (laughs) Unbelievable. It was unbelievable. Everybody wanted Messi to win the World Cup. It looked like a predetermined feat. Everybody was really happy, and not only Argentinians. And I became a grandfather in December. So it was a very good month.