Midwest (Minnesota)

Midwest (Minnesota)

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February 2019 Program Recap

By Jordan Grote posted Feb 21, 2019 11:40 AM


If you missed it, the February program was a hit! We had Dr. Scott Anderson, Executive Vice President / Chief Economist- Bank of the West as our guest speaker to discuss The Road Ahead: Challenges and Opportunities in the Global Economy.

Here’s a high-level summary of Dr. Anderson’s response to audience Q&A from CoreNet Midwest Chapter members:

What would be your policies if you became the first economist to run for President of the United States?

  • Invest in infrastructure and education to increase productivity
  • Need drivers of productivity—education, infrastructure, population
  • New technology / innovation

In a response to a Jeff LaFavre question about declining workforce, Dr, Anderson said he would encourage immigration. Population is aging and declining in number. We need the workers, talent and drive of immigrants.
Presentation Highlights

Dr. Anderson said the 2018 Economy is good as it is going to get. 3.1% growth in 2018. 10 years of economic expansion. 3.9% unemployment, a 49-year low. 20 million new jobs. He said, the best days are behind us and there will be no recession in 2019.

With respect to 2018 Growth Drivers, he cited the stimulus of tax cuts. (Also added that they won’t be long-lived.)

  • 0.75% contribution to growth in 2018
  • 0.50% contribution to growth in 2020
  • Negative contribution to growth after 2020
  • Called these a ‘Sugar high’

Dr. Anderson said federal Reserve actions are ‘taking away the punch bowl’ through monetary policy, interest rate hikes, monetary tightening, decline in liquidity, tightening credit and there are signs of slowing in interest rate-sensitive sectors including the housing market slowing down.

He outlined the potential causes of a Future Slowdown

  • Fading fiscal stimulus
  • Tighter credit, higher interest rates
  • Global slowdown (Trade wars, Chinese economy slowing). ‘Synchronized global slowdown.)
And finally, he lifted everyone’s spirits (I’m joking) with his discussion of Recession Probability:
  • 20% in 2019
  • 50% in 2020

Anderson predicts interest rate cut in 2020 in response to slowdown and worries:

  • Financial uncertainty. High PE ratios in stock market
  • Inverted yield curve
  • Income and wealth inequality, which he says are “massive.” 

All in all, this was a fantastic event!