2013 Promises Solid Economic GrowthPosted: April 30, 2013
Despite some weak economic numbers in the first quarter and the continuing chaos in Washington, 2013 is shaping up to be a year of solid economic growth.
That’s because the economy is being fueled by the oil and gas industry, a rebound in housing and pent up consumer spending, according to Bernard Baumohl, chief global economist at the Economic Outlook Group.
During ISM’s Economic Outlook Presentation, Baumohl told Conference attendees he is confident in the economy because its “fundamentals” are strong. The fundamentals he points to include:
- Americans who are eager to spend
- A housing and real estate market that is rebounding
- CEOs who are optimistic
- Banks that have strong balance sheets
Employment is increasing — although unevenly — he says, and the real question is why is that happening four years after the end of the Great Recession. He listed reasons why companies are still skittish about hiring, including anticipated increases in healthcare expenses, reduced demand for labor because of technology changes, and competition from a global environment.
What can be done to make a dent in unemployment?
“I believe the government has to get more involved in education,” he explained. “Many argue that we can’t do that because the government can’t afford it. Well, if you think education is expensive, just try ignorance.”
During the interactive session, Baumohl asked the crowd how the budget battle in Washington, D.C., was affecting their business. Using the Conference’s new ThumbTalk Interactive, 53 percent of participants replied that it was hurting their business. The rest were just about evenly split between expecting it to hurt later and saying it was not making a difference.
Attendees also logged in on their perception of some of the global risks facing businesses today.
Higher corporate taxes topped the interactive poll, followed by the European economic crisis.
After talking about global risk, Baumohl asked attendees how many have performed a stress test to protect against supply disruptions. The results — 49 percent, no; 39 percent, some but not rigorous; 12 percent, yes.
Baumohl said despite risks that persist in the global economy and a slow start to the new year, he predicts U.S. economic growth of 3.1 percent in 2013 and 3.4 percent in 2014.
What is your economic outlook for the rest of the year?