Note: The following is a guest post from the MACPA's director of finance, Skip Falatko, CPA.
The Maryland Bankers Association held its fifth annual First Friday Economic Outlook Forum in Baltimore last month, where prominent economists and chief investment officers opined on the economy and markets.
It’s always an interesting event, but more so this year because of diverging opinions on which direction we’re going. I especially liked the fact there wasn’t much “on the one hand / on the other hand” economist-speak. They just put it out there.
This year’s panelists included:
- Jay Bryson, a global economist with Wells Fargo Securities, LLC
- Gregory Miller, chief economist with SunTrust Banks, Inc.
- Jeffrey Schappe, CFA, chief investment officer with Sterling Capital Management/BB&T
Moderating the panel was Anirban Basu of Sage Policy Group.
First, let’s look at comments from last year’s panel and see how they stood up.
- Last year, the panelists predicted the range of 2011 unemployment to be around high 8 percent to 9 percent. Officially, we finished 2011 at 8.5 percent.
- Panelists predicted 2011 GDP to range from 2.9 percent to 4.5 percent. Actual 2011 GDP was 1.7 percent.
- BB&T’s Jeffrey Schappe was bullish on the 2011 stock market. The Dow finished up 5.5 percent, the S&P 500 was almost exactly flat, and NASDAQ was down 1.8 percent.
Here are the comments that stood out among this year’s panelists:
- Wells Fargo’s Jay Bryson expects more of the same economy we’re currently experiencing — not necessarily a recession, but low growth. So, 2012 and 2013 will be a lot like 2010 and 2011. Europe is the biggest risk factor to our economy as Italy and Spain are too big to bail out.
- SunTrust’s Gregory Miller noted our problems are more than just housing. They are complex, have been a long time developing and will take years to work out. That being said, Miller anticipates 2012 GDP to be around 3.5 percent based on fewer negatives than in the recent past. These negatives include housing contraction and government intervention in the economy which he sees diminishing.
- Gregory Miller added that the real labor market issue is the decline in real wages which impacts 140 million Americans.
- BB&T’s Jeffrey Schappe was less optimistic, noting that people are too complacent about the economy. Schappe stated third quarter 2011 GDP was revised downward (twice) to 1.8 percent, industrial production contracted in November, much of Europe is in a recession, China is slowing down, and we have weak (0.21 percent) gross domestic income, which he sees as a better economic indicator than GDP. Schappe predicts a return to recession in 2012, albeit not as severe as in 2008.
So there you have it. Three divergent views of where we’re headed economically. 2012 will bring us anywhere from a recessionary negative GDP to 3.5 percent GDP growth. Given the weakness in the U.S. and world economies, I tend to be more pessimistic. I’ll predict 2012 GDP of 1.5 percent.
What do you think?