AUBURN, Ala. (WDHN) — John Jahera, professor emeritus of finance at Auburn University’s Harbert College of Business, tells people to stay calm and stay the course.
According to Jahera, the stimulus packages are going to affect the national debt and debt is likely to rise unless there are cuts in other spending or an increase in tax revenue. As of last week, the federal debt is about $24.7 trillion dollars and the U.S. is on track to have the highest debt level as a percentage of GDP since WWII.
One way that the U.S. government will finance this debt is by issuing U.S. government securities. This means that the US will be borrowing from investors who buy those government securities. Of course, there is a downside in that higher inflation could be seen.
On a positive note, the economy was strong even in the fourth quarter of 2019 so Jahera believes it is reasonable to expect that a major rebound could be seen within a year or two after COVID-19 is contained, and people return to work.
Jahera repeats the advice of many financial experts to stay the course and don’t panic. In fact, this is a good time to buy stocks and mutual funds while the prices are low.
“So pay attention, do you homework and don’t panic.” Jahera said. “That’s the key thing. Don’t panic. Markets go up. Markets go down. Our markets will come back, probably in the fourth quarter of this year.”