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» VISIT US ONLINE @ DSNEWS.COM 15 D r. Lindsey Piegza is the Chief Economist for Stifel Fixed Income, where she specializes in research and analysis of economic trends and activity, world economies, financial markets, and fiscal policies. Piegza joined Stifel in 2015 amid the merger with Sterne Agee where she was Chief Economist. Prior to joining Stifel and Sterne Agee, she was the Senior Economist for an investment bank for eight years in New York City. In addition to more than 13 years of professional experience, Piegza has published academic papers in prestigious journals such as the Harvard Business Review and in textbooks from Northwestern University's Kellogg Graduate School of Management. She is a native of Chicago and is based in Stifel's downtown Chicago office. Do you think wage growth will keep up with home price appreciation? Certainly not. While the labor market has been positive, it is far from robust. Modest job creation averaging just 180k a month last year is hardly enough to absorb all of the lingering slack in the labor market and result in a sustainable upward trend in wages. Wage growth has been positive as of late but remains only modestly above the post-recession average, with a good portion of the increase the result of isolated pressure stemming from high demand for specific skills that are in low supply, particularly in sectors such as IT, craft labor, accounting and engineering. What does the Fed rate increase mean for those who plan on purchasing a home this year? A rise in financing costs will make it increasingly difficult for the average American to afford a home purchase without marginal income gains, assuming, of course, lending practices remain relatively steady. Particularly for potential first-time homebuyers, there is a lingering inability to afford a home purchase. Many young 20-somethings, for example, are coming out of college strapped with student loan debt, and coupled with elevated rental costs, it is increasingly difficult for the youngest Americans to save and accumulate enough wealth to meet the down payment requirement, let alone afford the monthly mortgage amid rising rates. Rising rates, while benefiting the savers and most senior Americans, will hard hit rate sensitive sectors of the economy including consumer credit and housing finance. With the economy seeing fluctuating mortgage rates over the past few months, what does this mean for the housing industry? e housing industry has been quite volatile as of late with no discernable upward trend in activity. Of course, if you take a step back, there has been vast improvement since a low in 2010. Still, with little momentum in the sector more recently, additional barriers to activity will continue to minimize residential real estate's contribution to headline activity. e good news—housing is no longer the large net drag it once was on the economy in the aftermath of the great recession, but it is also no longer the driver of the economy as it once was prior to the housing market crash. What impact do you see the possible privatization of Fannie Mae and Freddie Mac having on the economy? Any limitation or restriction to credit access or availability for consumers to finance a home purchase will exacerbate the slowdown in activity. Housing has been relatively steady over the past year; however, as preferences towards housing change coupled with a rising rate environment, any additional barriers to financing a home purchase will exacerbate the lack of growth in the U.S. housing market. What trends do you think the economy will see in the coming months? Overall, the economy is likely to perpetuate a trend of continued moderation. e consumer is still spending but remains restrained without marginal income gains. Business investment remains limp as corporations are hesitant to invest in equipment, structures, and high-wage or full-time employees amid an environment of uncertainty, high regulation and rising health care costs. Manufacturing is teetering along breakeven as a rising U.S. dollar makes U.S.-made goods relatively more expensive and less attractive on a global scale. And, government expenditures— resulting in a massive bloated balance sheet—continue to threaten topline growth facing now a rapidly aging population increasing demands on government programs coupled with the backdrop of a broken entitlement and health care system. Of course, we are embarking on a new fiscal era, one of potentially pro-growth policies aimed at easing the consumer's plight and freeing up capital investment dollars. At this point, however, we remain cautiously optimistic, as there are limitations to what the president and the government can do; there are limitations on what near-term policy can be enacted and the impact of said near-term policy. e U.S. economy has been bleeding momentum for years and while the alternative may have been to continue to follow a declining trend, it will take more than one presidential term of pro- growth initiatives to turn the tide.

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