A BMO economist looks into the future and sees, well, read on...
By Dian Vujovich
If you’re looking for economic forecasts, Sherry Cooper, Ph.D., executive vice president and chief economist with the BMO Financial Group, offered her point of view to a room filled with Harris Private Bank guests in West Palm Beach last week. What this award winning economic forecaster had to say didn’t disappoint the glass-half full crowd.
Cooper’s opening remarks to about 80 invited guests began like this: “I have good news for you
And we welcome good news after what we’ve been through in the last five or six years.”
I liked how she extended America’s suffering economy’s time frame back more than a handful of years. Anyone, like myself, who works for themselves in the media and financial reporting arena, knows only too well that our economic woes really did begin in the early 2000s.
That said, here is some of the economic realities that Cooper—who won the Lawrence Klein Award for U.S. forecasting accuracy in 2010— sees:
-Right now the U.S. economy is growing at a moderate pace. Growth rate for this year will be about 2.4 percent.
Looking at only countries of the G7, the U.S., both this year and next, will be the growth leader.
-The average age of automobiles in America is at a record high. As a result, people are beginning to feel the need to open their purses and purchase new vehicles.
-There is a real manufacturing renaissance going on in the U.S. thanks to improved competitiveness. Unit labor costs are now extremely attractive and lower than those in Canada, Europe and even some emerging economies.
Wage rates in places like China, Singapore and other emerging economies are increasing by almost 15 percent this year. Consequently we are seeing a shut down of manufacturing operations in other parts of the world and manufacturing expanding in the U.S.
-Europe is in recession, Japan is very gradually rebounding from the earthquake and tsunami and the emerging economies of the world, though still strong, have slowed considerably. The result: Global growth this year will be around 3 1/4 percent— weaker than it has been in the previous two years.
Greece is being asked to reduce its budget deficit and debt and its economy will continue to implode. That, however, grows the risk of adding to the budget deficit and making it near impossible to meet the targets set by Germany and other Northern European countries.
-Back in the United States, the unemployment rate has fallen to 8.3 percent. With some luck it could break through the 8 percent level before the election.
However, when you look at the broadest measure of discouraged workers and people who are involuntarily working less than full time the unemployment is at 15 percent.
The unemployment rate among the new veterans coming back from Afghanistan and Iraq is 16.7 percent.
-In Florida, the population has contracted for the first time in decades and did so in 2008, 2009 and 2010. But, we are seeing a resumption of population growth and I am confident that that population growth will continue to accelerate.
We’ve also seen a pick up in job growth, although the unemployment rate here is still the fifth highest in the country at 9.9 percent.
-Currently, North Dakota is the strongest economy in the country.
For more about Dr. Cooper’s economic outlook, see an accompanying story in The Palm Beach Daily News.
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