Investing

For months, there’s been a “vibecession.” That’s a disconnect between how well the economy is doing and how people feel about their financial standing.
Now, recent economic data and consumer sentiment are more in line, some experts say.
“The problem with the recessionistas is, of course, they will always at some point be right,” says Brett House, economics professor at Columbia Business School.

For months, economists have wrestled with the disconnect between how well the economy is doing and how badly people feel about their financial standing.
Now, evidence suggests that the so-called vibecession, or that prolonged period of negative sentiment about the economy, appears to be ending, according to Michael Pearce, deputy chief U.S. economist at Oxford Economics. 

As inflation cools and the Federal Reserve prepares to lower interest rates, Americans’ assessments of the future are improving, which is bringing the country’s economic standing more in line with consumer sentiment, Pearce wrote in a report published Friday. 
More from Personal Finance:’Emotionproof’ your portfolio ahead of the election’Recession pop’ is in: How music hits on economic trendsMore Americans are struggling even as inflation cools
Other economists also note a recent glass-half-full outlook.
“Consumer confidence seems to be catching up with where the economy is,” said Brett House, economics professor at Columbia Business School. “They are kind of meeting in the middle.”
However, it is difficult to pinpoint what is causing the shift in mood, Pearce wrote in his report. 

“Our leading candidates would be a lagged response to the news that inflation is falling back and appears to be on a sustained trend back to 2%,” Pearce wrote. “It could also reflect increased optimism for the future now that the Fed is on a clear path to lowering interest rates.”

Setting the stage for the Fed to cut rates

Recent economic data has paved the way for the central bank to lower its benchmark rate for the first time in years.
The personal consumption expenditures price index — the Fed’s preferred inflation gauge — showed a rise of 2.5% year over year in July. And, though the unemployment rate is still low at 4.2%, it has been trending higher over the past year.
“All signs point to continued progress on inflation, with pressures expected to ease further with the release of the August consumer price index on Wednesday,” said Greg McBride, chief financial analyst at Bankrate.com.
“Other measures of inflation — the personal consumption expenditures index and unit labor costs — have been telling the same story and have set the table for the Federal Reserve to begin cutting interest rates this month,” he said.
Markets are now pricing in a 100% probability that the Fed will start lowering rates when it meets Sept. 17-18, with the potential for more aggressive moves later in the year, according to the CME Group’s FedWatch measure.

‘Nailing a long-awaited soft landing’

Meanwhile, consumer spending has held up even better than expected, according to the most recent reading.
“The American consumer has been resilient,” Jack Kleinhenz, chief economist at the National Retail Federation, said in the September issue of NRF’s Monthly Economic Review, released Friday
Despite earlier expectations of a recession, the U.S. has dodged a downturn, according to Kleinhenz.
“The U.S. economy is clearly not in a recession nor is it likely to head into a recession in the home stretch of 2024,” Kleinhenz said. “Instead, it appears that the economy is on the cusp of nailing a long-awaited soft landing with a simultaneous cooling of growth and inflation.”

Progress on inflation without a sizeable deterioration in the labor market has created a “classic ‘Goldilocks’ scenario,” Columbia’s House said.
Although as CNBC’s Bob Pisani recently put it, there is still a group of “recessionistas” who have been insisting there is a serious slowdown coming. And yet, fewer economists now see that happening in the near term. Goldman Sachs recently slashed the probability of an economic downturn from 25% to 20%, shortly after raising it from 15%.
“That bandwagon was very crowded in 2023, and for good reason, but the odds of a soft landing have continued to grow over the last 12 months,” McBride said.

Officially, the National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” The last time that happened was early in 2020, when the economy came to an abrupt halt.
In the last century, there have been more than a dozen recessions, some lasting as long as a year and a half.

‘Recessionistas will eventually be right’

“The problem with the recessionistas is, of course, they will always at some point be right,” House said. “It’s certainly the case, at some point in the future, the U.S. economy will dip into a recession.”
Since the fall of the Berlin Wall, some kind of economic disruption or correction has happened with pretty predictable regularity, according to House. Now there is the added uncertainty of an upcoming U.S. presidential election and the prospect of significant policy shifts.
“The recessionistas will eventually be right,” House said, but “there is no victory if it comes in a few years.”

Don’t miss these insights from CNBC PRO More

On Sept. 5, U.S. District Judge Randal Hall in Augusta, Georgia, issued a temporary restraining order against President Joe Biden’s second effort to cancel student debt for millions of Americans.
The administration was expected to publish its final rule on its revised student loan forgiveness plan, which could impact more than 25 million Americans, in October.
Here’s what borrowers need to know about what could happen next.

U.S. President Joe Biden speaks as he announces a new plan for federal student loan relief during a visit to Madison Area Technical College Truax Campus, in Madison, Wisconsin, U.S, April 8, 2024. 
Kevin Lamarque | Reuters

Earlier this summer, millions of federal student loan borrowers got a promising email. The Biden administration informed them that debt forgiveness was on the way and that they may be eligible.
However, before the U.S. Department of Education could publish its final rule on the debt relief and start to carry out its new sweeping loan forgiveness plan, a Republican-led challenge has managed to at least temporarily block the relief.

Here’s what we know so far.

Relief plan blocked until at least mid-September

On Sept. 5, U.S. District Judge Randal Hall in Augusta, Georgia, issued a temporary restraining order against President Joe Biden’s second effort to cancel student debt for millions of Americans. The Biden administration had previously tried to offer sweeping student debt forgiveness in 2022.
Hall, appointed by former Republican President George W. Bush, was responding to a lawsuit against the relief package brought by seven Republican-led states a few days earlier. The states — Alabama, Arkansas, Florida, Georgia, Missouri, North Dakota and Ohio — said the U.S. Department of Education’s new debt cancellation effort, like its previous attempts, is illegal.
More from Personal Finance:The ‘rent-first’ lifestyle is catching on’Recession pop’ is in: How music hits on economic trendsMore Americans are struggling even as inflation cools
Hall said the states had made a convincing case that the department was overstepping its authority, and blocked the Biden administration from moving forward with its plan until a Sept. 18 hearing.

“The court has only issued a temporary restraining order and the scope of the order is not clear,” said Luke Herrine, an assistant professor of law at the University of Alabama.
It appears the administration can still proceed with finalizing the rule and preparing to cancel the debt, Herrine said. But it likely won’t be able to start forgiving the loans until the courts decide on the rule’s legality, which could take months, experts say.
The Department of Education did not immediately respond to a request for comment.

In June 2023, the Supreme Court ruled that Biden’s attempt to cancel around $400 billion in federal student debt was unconstitutional. Immediately after, Biden vowed to find another way to deliver relief to borrowers.
Biden’s first attempt to forgive student debt was through an executive action. This time, his administration has pursued the regulatory process, a lengthier route that it hoped would make its relief package more immune to legal challenges.
It was not expected to publish its final rule on its revised student loan forgiveness plan, which could impact more than 25 million Americans, until October. However, in their lawsuit, the state attorneys general said they had discovered evidence that the Education Department had ordered federal loan servicers to begin erasing the loans as early as Sept. 3.
Yet it’s unlikely the Biden administration would break the rules of the regulatory process timeline, legal experts said.
“I strongly doubt that this allegation is true,” Herrine said.
Most likely, the administration had told the loan servicers to prepare to forgive the debt once the rule is finalized, he said.

Borrowers in limbo, again

For now, the future of the Biden administration’s new wide-scale student loan forgiveness plan is uncertain.
The Biden administration’s new affordable repayment plan for student loan borrowers, known as SAVE, is also tied up in the courts from a barrage of GOP-legal challenges. Those enrolled in the plan are excused from making payments for the time being.

As things stand, most of the Biden administration’s hopes to deliver relief to borrowers ahead of the 2024 presidential election are now stalled.
That may be part of the point, Herrine said.
“The GOP knows that student debt cancellation is popular and they want to prevent the Biden administration from doing popular things,” Herrine said.

Don’t miss these insights from CNBC PRO More

With the presidential election approaching, experts are sounding alarms about the upcoming expiration of the 2017 Tax Cuts and Jobs Act, or TCJA.
Without action from Congress, trillions in tax breaks enacted by former President Donald Trump via the TCJA will expire after 2025. The outcome of the 2024 election will determine which political party will handle those expiring tax breaks — and shape America’s tax policy for years to come.

“If the 2017 tax cuts are allowed to expire after 2025, about 62% of taxpayers would see their tax bills go up,” said Erica York, senior economist and research director at the Tax Foundation. “That’s because the TCJA provided tax cuts for the vast majority of taxpayers.”
A majority of Americans, 56%, already believe they pay too much in federal income taxes, according to an April 2024 Gallup poll. Meanwhile, only 22% think they receive valuable services in return, as reported by an AP-NORC survey from January 2024.
Both Trump, the Republican presidential candidate, and Vice President Kamala Harris, the Democratic candidate, have called for tax changes that could affect millions of Americans. While there is some overlap on ideas — including an expanded child tax credit and no tax on tips — their approaches differ.
“Everything we have to do should be oriented towards one thing: increasing the rate of economic growth of our country,” Stephen Moore, an economic advisor to the Trump campaign, told CNBC.
The Harris campaign did not provide comment in time to participate in this report.
Watch the video above to learn more about how Harris and Trump each plan to tackle the tax code if they win the White House. More

The IRS is working on plans to avoid increased audits on taxpayers making less than $400,000 — but certain areas can invite scrutiny, regardless of income.
Some red flags could include unreported income, including cryptocurrency earnings and unreasonable tax breaks.
For all returns filed between 2013 and 2021, the IRS examined 0.44% of individual returns and 0.74% of corporate returns as of the end of fiscal 2023, according to the latest Databook.

Photo By Rafa Elias | Moment | Getty Images

The IRS is still working on plans to avoid increased audits on taxpayers making less than $400,000 — but certain particulars of your tax return can invite scrutiny, regardless of income level, experts say.
The Treasury Inspector General for Tax Administration, or TIGTA, last week reported the IRS has made “limited progress” in developing the methodology for its audit coverage calculation to comply with a directive from the U.S. Department of the Treasury.

In August 2022, Congress approved $80 billion in IRS funding, including tens of billions earmarked for enforcement. The same month, the Treasury issued a directive to the IRS, saying the funds couldn’t be used for increased audits on small businesses or households earning less than $400,000 annually.  
More from Personal Finance:These are the top 10 highest-paying college majorsHere’s what Harris’ plan to tax unrealized gains means for the wealthySeven Republican-led states sue to block Biden’s student loan forgiveness
In response, the IRS agreed to TIGTA’s recommendations and plans to document the development of its audit methodology, the report said.
Meanwhile, the IRS has continued to focus enforcement efforts on higher earners, large corporations and complex partnerships. The Treasury Department on Friday announced $1.3 billion has been recovered from “high-income, high-wealth individuals.”
“It’s not right that everyday Americans pay taxes while struggling to make ends meet, but some of the wealthiest in this country have been able to evade payment,” Treasury Secretary Janet Yellen said Friday at an event in Austin, Texas.

Regardless of your income, here are some red flags for IRS audits, according to tax experts.

It’s easy for IRS to catch missing income

While IRS enforcement is focused on wealthy Americans, everyday taxpayers could still face an audit if they haven’t filed an accurate return, experts say. 
One common red flag is missing income. Employers and financial institutions use so-called information returns, such as Forms W-2 or 1099, to report your earnings directly to the IRS. Once the agency has information returns, it can easily flag incomplete filings.
“That has a significant return on investment” for the IRS, according to Eric Hylton, national director of compliance for Alliantgroup and former IRS commissioner for the agency’s small business and self-employed division.

Crypto investors could see enforcement

Crypto investors will also be subject to income reported via information returns.
The IRS finalized cryptocurrency tax guidance in July, which included guidelines for digital asset brokers. Mandatory yearly reporting will phase in starting in 2026, covering activity from 2025.
“Everybody’s been waiting for the tidal wave of this enforcement activity,” James Creech, an attorney and senior manager at accounting firm Baker Tilly, previously told CNBC.

Taxpayers need ‘to support every line item’   

Another common audit trigger is unreasonable deductions, said Hylton with Alliantgroup.
For example, if you’re making $75,000 per year and claim $15,000 or $20,000 in charitable deductions, that could invite IRS scrutiny, he said.

When claiming a tax break, you need detailed paperwork “to support every line item,” said Hylton said. During an audit, a credit or deduction could be disallowed without proof.
Despite areas of heightened scrutiny, IRS audits are still rare.
For all returns filed between 2013 and 2021, the IRS examined 0.44% of individual returns and 0.74% of corporate returns as of the end of fiscal 2023, according to its latest Databook. More

George Kinder is recognized as the father of the “life planning” movement of financial advice.
Consumers often put the emphasis in the wrong areas when it comes to personal finance, Kinder said.
His “three questions” aim to uncover your goals and desires, and inspire you to take steps to achieve those dreams financially.

George Kinder
Kinder Institute

George Kinder wants everyone to be free.
At first blush, that concept of personal fulfillment or enlightenment may seem better suited to the realms of religion or spirituality than personal finance.

But Kinder, who’s recognized as the father of the “life planning” branch of financial advice, has preached the interconnection of finance and freedom for decades.
In fact, his new book — “The Three Domains of Freedom” — is a treatise on the topic.
“There are kinds of goals that are profoundly inspiring to clients,” Kinder, who founded the Kinder Institute of Life Planning in 2003 after three decades as a financial planner and tax advisor, said in an interview.
More from Personal Finance:Working 10-to-4 is the new 9-to-5Taxes may be a blind spot in your investment portfolioA recession could upend your retirement plans
He’s perhaps best known for his “three questions,” which aim to help people uncover the essence of their life goals.

“If you identify those and really paint the picture of what [someone’s] life would be like if they actually had that life, clients are on fire and they solve the financial problems pretty quickly and pretty easily,” Kinder said.
CNBC spoke with Kinder about life planning and why he thinks many people miss the point when it comes to managing their money. This interview has been edited and condensed for clarity.

‘You should be focused on your dream of freedom’

Greg Iacurci: What is the basic premise of the life planning movement?
George Kinder: The basic premise is that financial planning is about delivering a client into freedom. Every person has a dream of freedom, and they ought to be living it. And that goes for people who don’t have any money, people who are in debt, as well as people who have lots of money.
The focus shifts from money — where we have a lot of anxiety and there are a lot of tasks to do — to freedom. What does it actually look like, feel like, and what are the steps to get there?

GI: What do you mean by freedom?
GK: I think each of us has our own feeling for it, and the way we get at it is through the three questions.
If people just focus on the money, they lose track of who it is they really want to be and what it is they want to do. And often they assume, “Maybe I can’t do that until retirement, or maybe I’ll never get there. So I don’t really want to face it. I’ll just try to be more efficient around [my] money.”
The premise of life planning is, no, you should be focused on your dream of freedom, and do some of these exercises to discover what it is. And then you’ll find that the money side of it goes much smoother, because it doesn’t feel like an onerous task.

‘People get lost in the daily stuff’

GI: You think people are blindly saving money or trying to amass wealth without really considering what it’s for?
GK: Everybody I’ve met does that. This is endemic across civilization. People get lost in the daily stuff of it, and they don’t have a structure. Without really having that dream of freedom, the [financial] tasks are tough to follow.
GI: The three questions help underline what is most important to people and what they want to do with their life — it gets them thinking about how they might apply their money to furthering those goals?
GK: Exactly. It puts your eyes on the prize. People don’t know what they’re aiming at, really. I think they end up aiming at things that they read in financial journals or The Wall Street Journal or personal finance blogs. They’re thinking that they’ve got to just fix their IRA and do more budgeting. They get lost in that rather than always keeping their eyes on, “OK, this has a reason, and the reason is that I want to live this kind of life, and if I do these things [then] I can get there, and get there in relatively short order.”

George Kinder
Kinder Institute

GI: But that’s not necessarily to say that the way that people are saving is wrong, right? You hear these rules of thumb, like you should be saving at least 15% of your income towards retirement. You’re just saying to question why you’re doing that?
GK: It’s not wrong. And moreover, if you read good advice columns, or if you’ve read books or you have an advisor, you’ve got a pretty good bead on how to save and how to invest and all of that. So it’s not wrong. But the focus is off, so that you’re lost.
You said, “saving 15% for retirement.” Well, why are we using the frame “retirement”? What I would argue is a much, much more potent and appropriate term for every human being is “freedom.” And freedom might happen in a year, it might happen in six years. It doesn’t necessarily have to time with what we normally think of as retirement.
GI: Basically, don’t necessarily put off your goals and ambitions until you retire.
GK: Exactly. When we look at these things, we look at, how can we make this happen very, very shortly. Usually by “very shortly” I mean sometimes it’s within a matter of months, and is almost always within a matter of three years, and is usually within a matter of about a year and a half.
It may mean that you’re not getting what it is that you want exactly, but you’re really on the road to it, and you feel a lot of freedom from it.
For instance, if your dream is to live in the country and you’re living in the city: Maybe you do a two-week vacation every once in a while off in the country [but now] maybe you’re doing four or six weeks. Maybe you’re doing more remote work. Maybe you’re already looking at where it is you want to stay, and figuring out how, in a year or two, you can spend three months there. So you’re moving actively toward the freedom as part of the program of financial planning, of your financial life.

‘We only experience freedom in the present moment’

GI: Do you think that this is something that everyone could put into practice, or do you think this is more a luxury that people with means are better suited for? Maybe they’re able to more easily achieve that freedom financially.
GK: When we frame it in terms of financial freedom, then yes, of course, the people who have more means are more capable of it.
But I grew up in a very poor part of the country. I was born in West Virginia and lived across the border in rural Ohio. I think what you realize when you grow up with people who are not well-to-do is you realize every single one of them has a dream of freedom. Every one of them wants to live a life that is extraordinary for them.

So, I would say absolutely this is available for everyone. And the primary reason is that when you arrive at the dream of freedom, if you do it well, you get extremely energized. You get vigorous around its accomplishment. So that’s why it’s not so much about money as it is about the building of passion of who it is you really want to be.
GI: How does your new book further your work on life planning?
GK: The centerpiece of the book is giving inspiration and tips on doing your own life plan, so that you’re living [it]. The second subtitle of “The Three Domains of Freedom” is “Your Life Is Yours.” That portion of the book is dedicated to inspiring the consumer to do it themselves, and if they can’t do it themselves, then to find a fiduciary who combines these things to help with it.
There are two other elements. They may seem far afield, but they’re not really.

Why are we using the frame ‘retirement’? What I would argue is a much, much more potent and appropriate term for every human being is ‘freedom.’

George Kinder
founder of the Kinder Institute of Life Planning

We only experience freedom in the present moment. It’s the only moment we ever experience. I dedicate a third of the book to how to get mastery of the present moment itself, and mindfulness plays a big role in that. In terms of personal finance, it helps because the more that you’re not twisted and torn in the present moment, the more that you’re not struggling or neurotic in some way, the more you’re at peace and the more accessible your decisions.
And then the final third [of the book] takes the notion of “fiduciary” and applies it. What if, in addition to being able to have financial advisors that are fiduciaries, what if every institution, every corporation, every nonprofit, every government, was a fiduciary to the truth, to democracy, to the planet, to humanity? What I’m doing is saying, let’s require them to be fiduciaries, ahead of their own self-interest. And if we did that, I think it would solve the craziness that we’re in. More

In an aerial view, customers leave a Planet Fitness gym on May 09, 2024 in Richmond, California. 
Justin Sullivan | Getty Images

September started on a rough note for the U.S. stock market, with certain economic readings showing signs of weakness.
Ignoring the near-term noise, investors looking for stock picks can consider the recommendations of top Wall Street analysts. These experts conduct research and assess the ability of a company to navigate headwinds and deliver growth over the long term.

Bearing that in mind, here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
Planet Fitness
This week’s first pick is Planet Fitness (PLNT), a franchisor and operator of over 2,600 fitness centers. The company recently reported better-than-expected results for the second quarter and reiterated its full-year guidance. Management attributed the Q2 performance to the strength of the company’s asset-light franchise model.
Recently, Baird analyst Jonathan Komp reaffirmed a buy rating on PLNT stock with a price target of $92. The analyst assigned the stock a new “Bullish Fresh Pick” designation, as he is optimistic about the company’s initiatives under the new leadership and other growth drivers.
The analyst noted that management has made efforts to enhance return on invested capital for new units through higher pricing, reduced capital expenditure and extended remodel timelines. CEO Colleen Keating aims to further strengthen the company’s position by bolstering its leadership, improving members’ experience, and enhancing marketing efforts.     
Aside from the new leadership, Komp cited several reasons for his bullish thesis, including Planet Fitness’ solid consumer value proposition and a high-margin franchise model that is expected to be resilient in a tough macro environment.  

The analyst added that “growing cash return capacity, and range of drivers into 2025E position the stock well for a slowing growth environment.”
Komp ranks No. 266 among more than 9,000 analysts tracked by TipRanks. His ratings have been profitable 56% of the time, delivering an average return of 15.1%. (See Planet Fitness Stock Charts on TipRanks) 
Ross Stores
We move to off-price retail chain Ross Stores (ROST). The retailer reported upbeat results for the second quarter, as it attracted customers with its enhanced value offerings. Ross Stores raised its full-year earnings guidance to reflect the demand for its discounted offerings and additional efficiencies.
In reaction to the strong Q2 print, TD Cowen analyst John Kernan reaffirmed a buy rating on Ross Stores stock and raised the price target to $185 from $173. The analyst expects the company’s enhanced merchandising efforts to drive upside to the guidance for the second half of the year.
Kernan highlighted that management’s initiatives to bolster Ross Stores’ value offerings and an increased mix of branded merchandise across certain categories, including ladies apparel and cosmetics, have fueled the company’s comparable sales for the past several quarters.
Kernan noted that the company’s margins and earnings are also benefiting from the merchandising efforts and cost savings across distribution, logistics and store networks. Overall, the analyst expects ROST’s operating margin to expand to more than 13% by fiscal 2028 from 11.3% in fiscal 2023. 
“We believe ROST’s valuation discount to TJX is still too wide (given similar growth and ROIC profiles), which could produce upside to ROST in the near-term,” said Kernan.   
Kernan ranks No. 795 among more than 9,000 analysts tracked by TipRanks. His ratings have been successful 54% of the time, delivering an average return of 7.8%. (See Ross Stores Technical Analysis on TipRanks)
SentinelOne
Finally, there is cybersecurity provider SentinelOne (S). The company reported market-beating results for the second quarter of fiscal 2025. This marked the first time that the company delivered positive net income and earnings per share on an adjusted basis. SentinelOne also raised its full-year revenue guidance, backed by robust momentum and the strength of its AI-powered Singularity Platform.
Following the results, Baird analyst Shrenik Kothari reiterated a buy rating on SentinelOne stock with a price target of $29. The analyst noted the company’s strong Q2 performance and the 32% growth in the annual recurring revenue, driven by new business and solid expansion within the existing customer base due to emerging products across cloud, data and AI. 
Kothari added that despite a challenging macro backdrop, the company upgraded its full-year outlook with expectations of improved net-new ARR in the second half of the year. The upgraded outlook reflects stronger pipeline retention and better win rates, backed by notable progress in the company’s go-to-market strategy.
Commenting on the expectations of SentinelOne benefiting from the July IT outage led by rival CrowdStrike, Kothari thinks that the management is taking a “prudent” stance. Highlighting the resilience of SentinelOne’s offerings, management noted that there has been a shift in sentiment after the outage, with growing interest in the company’s platform from some of the world’s largest organizations.    
“Overall, S is executing well on its transition to the new operating model and strong RPO [remaining performance obligation] growth (40% y/y) suggests durable demand and potential upside to the prudent outlook,” said Kothari.
Kothari ranks No. 233 among more than 9,000 analysts tracked by TipRanks. His ratings have been profitable 69% of the time, delivering an average return of 22.1%. (See SentinelOne Hedge Funds Trading Activity on TipRanks) More

In Stacey D’Erasmo’s new book, “The Long Run,” she interviews artists who are late in their careers.
What interested D’Erasmo was not what got these artists going, but what kept them going over decades of life.

Carol Yepes | Moment | Getty Images

In Stacey D’Erasmo’s new book, “The Long Run,” she interviews artists who are late in their careers.
There’s dancer and performer Valda Setterfield, who performed through her 80s despite serious injuries from a car accident in her 40s. There’s writer Samuel Delany, now 82, who has published more than 40 books although he’s dyslexic.

D’Erasmo also provides anecdotes from artists of the past, including that Monet painted his impressionist water lilies the way he did because his vision was deteriorating from cataracts.

Author Stacey D’Erasmo
Photo: Sarah Shatz

What interested D’Erasmo was not what got these artists going, but what kept them going over decades of life. Romanticized ideas of the starving artist, she says, ignore the reality that art is made “by real people with real needs in real places.” Those include financial realities, which often require balancing one’s art with another job.
“What gets us started — those first few years, or perhaps those early moments of artistic ignition — is brief, fiery, and beautiful, of course,” D’Erasmo said. “It’s a story the culture loves to tell as in, say, ‘A Star is Born.'”
On the other hand, she said, “The story of duration, of a sensibility unfolding over time and the life that evolves to keep art at the center is a story that gets told less often. To me, that is such a heroic story.”
CNBC interviewed D’Erasmo, the author of five novels and two nonfiction books, by email this month. (The conversation has been edited and condensed for style and clarity.)

‘When you starve the artist, you starve artmaking’

Annie Nova: Why is it a heroic story when someone sticks to their art over a lifetime?
Stacey D’Erasmo: In this world, it is so hard to do that. As a writer who knows lots of other writers and artists, I’ve experienced firsthand the urgency of this question: How do we keep doing this, on all levels? Which is to say: How do I support a complex and often difficult practice that means everything to me, even though it may not immediately, or ever, produce money, glory or approval? That’s not a three-act drama, roll credits. It’s a life.
AN: The idea of the “starving artist” is a familiar trope in our culture. What does it get wrong? How does financial stability help to create art?
SD: Well, if all the artists were starving, they’d be dead, and we wouldn’t have any art! That trope romanticizes deprivation, and it’s a fantasy of art as some sort of magic that can live on nothing, but art doesn’t get made in some ethereal realm. It’s made by real people with real needs in real places.
Financial stability is a godsend to the artist, primarily because the less you have to think about money, the more you can think about what truly matters to you. In this country, though, even basic financial stability can be very hard to come by, as we know. Among other things, that is never good for the arts. When you starve the artist, you starve artmaking.

We long endlessly for more time.

Stacey D’Erasmo

AN: What do you see with people balancing a job to pay the bills with their art? Does it matter if the job is related to their art?
SD: I would say that 99% of the artists and writers I know balance a bill-paying job with their own work. Whether it’s related to one’s art or not is a matter of temperament: Some people love to do something totally unrelated, and others want to be immersed in cultural work.
The problem people constantly face is that the day job’s demands are often urgent — things need to happen today, this week, right now, before 5. That’s true whether your job is woodworking or running a gallery. Art-making has its own idiosyncratic clock. The difference between these two clocks is hard to navigate, which is why I and nearly everyone I know pines not so much for money per se as for time. We long endlessly for more time.

‘There really is no free lunch’ for artists

AN: The artists profiled in your book work in all different mediums. Do some take more money to sustain than others?
SD: Film, as we all know, just inhales money. Even the lowest-budget film costs way more than what it costs a writer to sit down at their desk and write. Visual art requires all sorts of materials. Dance requires not only costumes and lighting and so on, not to mention dancers who need to eat, but rehearsal space, and space often does not come cheap. Artists, writers and arts organizations all spend a fair amount of time seeking grants and other sources of funding just to keep the lights on. Writing is probably the cheapest medium in terms of art creation, but distributing it in the world — publishing, also requires a fair amount of money that someone has to pay. Sadly, there really is no free lunch.
More from Personal Finance:How investors can prepare for lower interest ratesWhy some investors shouldn’t max out 401(k) contributions’Was my Social Security number stolen?’ Answers to your data breach questions
AN: How does economic inequality determine who gets to make art?
SD: That’s a book-length question, but the short answer is: A lot.
I would also say that economic inequality is most brutal not only in who gets to make art, but also in who gets to have a career and a life in art. I live in New York City, and I see acts of creation everywhere every day: a person walking down the street who has put together a fantastic look, a person making glorious graffiti, or something like ball culture, which you can now see in the glossy television show “Pose.” All of those people are making art, but the structural inequality of opportunity means that few of them would ever be able to build a life around it. We’re missing out greatly on what those people might be able to do not for a moment or a season, but for decades.

‘As the artist changes over time, so does the art’

Valda Setterfield attends the Hold My Hand Forever Exhibition By Forevermark at Highline Studios in New York City, Nov. 17, 2014.
Dustin Harris | Getty Images

AN: There are some artistic professions that come with an early retirement age. I’m thinking of dancers. How do people reinvent themselves after an early end to a career?
SD: Some dancers become choreographers. Some actors move into directing — think of someone like Ron Howard. But that makes it sound seamless or easy, and often it isn’t. Valda Setterfield, a dancer whom I profile in the book, had a horrific car accident at 40 and she thought her life on stage might be over. Her husband, choreographer David Gordon, helped her learn to move again, and she also began to do more theater and film work, which continued for the rest of her life.
Vera Wang was an aspiring Olympic figure skater, but she didn’t make the Olympic team in 1968. Then she turned to fashion. Later, she began designing costumes for Olympic-level figure skaters such as Nancy Kerrigan and Michelle Kwan. When I look at Wang’s designs, it seems to me that they have a precision and grace not unlike a figure skater’s balletic moves.
Often, people reinvent themselves by opening up a slightly different channel through which their gifts can flow

AN: What advantages do middle and later career artists hold over younger ones?
SD: So much more comfort with the weirdness, unpredictability and challenges of the process. You’re just not as freaked out all the time. I don’t mind my own stumbling. I also don’t feel as brittle or defensive. When I was younger, for instance, I would look at all the incredible writers who had come before me, and who were around me, and feel terribly intimidated by the depth and breadth of the field.
But now, it all looks to me like this extraordinary abundance. If you’re fortunate enough to have a long run, there can be so much freedom in mid- and late career.
AN: How do you see people’s art change as they get older?
SD: Again: a book-length question, and several books have been written about it, such as Edward Said’s “Late Style.” What I noticed about the people I interviewed is that their work changed, and changed again, over time. They weren’t waxwork replicas of their younger selves.
The musician Steve Earle, for instance, who came up as a rollicking solo artist in country music in Nashville in the ’70s and ’80s, has moved increasingly toward musical theater in the latter half of his life — a collaborative, multimedia form. The renowned writer Samuel Delany has traversed myriad genres over the course of his life. Intuitively, it makes sense. As the artist changes over time, so does the art, because we make it out of ourselves.

‘Creativity isn’t a machine’

Arrows pointing outwards

AN: In the end, what were the biggest things you found that helped people sustain a creative life?
SD: As we get older, the willingness to be open, to be vulnerable, to be a beginner, to be out of one’s comfort zone can get a little stiff. You aren’t always so confident that you won’t break something, literally or figuratively. Shame lurks around. But the people who have sustained what looks to me like a truly alive creative practice are the ones who are willing to take the risk of flopping. I hope that I am able to risk embarrassment for the rest of my life.
AN: What can people do if they hit a period of disillusionment with their art or creativity?
SD: Remember that it happens to everyone — this I know for a fact. Creativity isn’t a machine, it’s an organism. Organisms get tired, bored, distracted, daunted, ornery. Stop. Take a walk — and by this I mean: Go somewhere else, do something different, maybe for an hour, maybe for a year. Or several. Keep walking. Look around. What do you see? More

A Forward Air Corportation truck.
Courtesy: Business Wire

Company: Forward Air (FWRD)

Business: Forward Air is an asset-light provider of transportation services. These transportation services include less-than-truckload (LTL), truckload and intermodal drayage services and freight brokerage and supply chain services across North America, Europe and Asia. Its segments include Expedited Freight, Intermodal and Omni Logistics.
Stock Market Value: $884.7M ($31.94 per share)

Stock chart icon

Forward Air’s performance in 2024

Activist: Ancora Advisors

Percentage Ownership: approximately 4%
Average Cost: n/a
Activist Commentary: Ancora is primarily a family wealth investment advisory firm and fund manager with $9.5 billion in assets under management. The firm has an alternative asset management division that manages approximately $1.3 billion. It was founded in 2003, and it hired James Chadwick in 2014 to pursue activist efforts in niche areas like banks, thrifts and closed-end funds. Ancora’s website lists “small cap activist” as part of its products and strategies, and its tactics have evolved in recent years. From 2010 to 2020, the majority of Ancora’s activism was 13D filings on micro-cap companies, and in the past few years they have taken a greater number of sub-5% stakes in larger companies. The alternatives team has a track record of using private and when necessary, public engagement with portfolio companies to catalyze corporate governance improvements and long-term value creation.

What’s happening

On Aug. 20, Ancora sent a letter to Forward Air’s board. The firm called for the initiation of a strategic review by independent legal and financial advisors, noting that improving operations and fixing the balance sheet would be better achieved as a private company.

Behind the scenes

Forward Air is an asset-light transportation company focused on expedited less-than truckload markets; all their goods are transported by ground. The company offers an alternative time-definite delivery solution at a lower cost than traditional air freight, and it also has various other transportation services including intermodal drayage, brokerage and final mile. However, most of its profits are generated by the core Expedited LTL business (80% in 2023).

Ancora has a nearly four-year history at Forward Air, initially filing a 13D on Dec. 28, 2020, and ultimately settling for two board seats on March 15, 2021. This campaign was concentrated on capital allocation, cost cutting, margin improvements and shedding non-core or underperforming assets. By late 2021, the stock began performing better after the company cleaned up the business, bringing the price to over $120 per share. Ancora exited in February 2022 and made a 58.63% return on its investment versus 5.13% for the Russell 2000 over the same period.
However, by late 2023, the company’s stock price began to languish. In October 2023, Ancora announced that it had again become a top shareholder when the stock was trading in the low-$70s. This came following the company’s announcement in August 2023, that it would acquire one of its top five customers, Omni Logistics, at 18-times trailing earnings before interest, taxes, depreciation and amortization, well above the multiple at which the company was trading. Forward Air’s stock tumbled following the announcement. Ancora vehemently opposed the deal, stating that it viewed the transaction as an entrenchment of management and the board to ensure excessive levels of compensation, and the firm argued that the deal was structured to avoid a shareholder vote. Ultimately, despite Ancora’s objections, the Omni deal closed on Jan. 25, 2024, and Ancora sold down its position in the first quarter of 2024. Since that time, the stock sank as low as $11.21 in May and is now trading in the low $30’s.
When an investor publicly agitates for a sale of the company with no detailed analysis on alternative paths to value creation, we often view such campaigns negatively as short-term opportunistic engagements, which do not showcase shareholder activism in a good light. But, in this case, Ancora ran two prior campaigns, the first of which was long-term oriented, highly successful and based upon thoughtful analysis for business improvement and collaboration. The second was launched after Ancora’s two directors resigned from the board. Ancora is now back at Forward Air once more – now as a top 10 shareholder with a position of approximately 4% – and after the company has drastically changed due to the Omni Logistics acquisition. This time the activist’s message is simple: Hire advisors and sell the company. Ancora acknowledges the path to value creation as a public company. However, the firm notes that if the company remains public, it will need to flawlessly execute to achieve deal-related synergies, cut excess costs, fix its highly levered balance sheet and grow in a profitable manner. Ancora sees this as a Herculean feat, especially for this management team and board, many of whom oversaw questionable decisions like the debt-funded acquisition of Omni.
Simply put, Forward Air is a great company that did a bad deal. It now has an over-levered balance sheet and bloated selling, general and administrative expenses. What needs to be done here – sell off non-core assets and restructure operations – is best done in private. Moreover, these are also the things that private equity funds excel at. It just so happens that private equity firm, Clearlake Capital, made the rare move of filing a 13D with language suggesting their desire to engage with the board about strategic alternatives. While this does not necessarily mean that Clearlake is the clear potential acquirer, the firm could certainly put the company in play with an offer. Clearlake owns a 13.8% stake, and Ancora owns about 4%. Irenic Capital built a nearly 5% stake earlier this year and called for a strategic review, including weighing a possible sale of the Forward Air. The key investor to watch here is major stockholder Ridgemont Equity. Ancora has two ways to force a sale of the company – through persuasion or through a proxy fight, and either way is likely going to require the support of Ridgemont, which also has two board seats at Forward Air. However, Ridgemont acquired its stake as a large shareholder of Omni Logistics and retained its ownership in the surviving company. So, there is no reason to believe the firm would not roll over its equity again in a private equity takeout. The one potential roadblock to a private equity acquisition is the company’s large debt load of approximately $1.6 billion with interest payments already suffocating the cash flow private equity investors love so much.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More