The audience and speakers at the 2016 Economic Forecast remain cautiously upbeat about the economy.
The forecast on Tuesday marked the debut of new Federal Reserve Bank of Philadelphia and former University of Delaware President Patrick Harker. (The event typically features remarks from the Philadelphia Fed chief).
Harker told the large crowd Clayton Hall that remained optimistic, despite recent news. He cited continued growth in the number of jobs as one reason for his optimism.
While acknowledging the impact of cutbacks at DuPont, he said the Delaware economy has many pluses. He cited the University of Delaware STAR Campus as an example of the types of investments that will pay off in the state.
Under Harker, the Univeristy of Delaware purchased the former Chrysler assembly plant and created the campus, which now house classrooms, Bloom Energy, tech company SevOne and the UD vehicle-to-grid electric vehicle program.
Turning to the national economy, Harker said, “China is not our major trading partner,” in making his case for the U.S. economy not being severely affected by problems in that nation.
The stock market, which has been hammered by low energy prices and worries about China’s economy, could slow but not stop growth in the U.S. economy, Harker added.
Harker did caution that wages could move upward in the coming year and add inflationary pressures. The Philadelphia Fed president also sees energy prices moving up from their current lows and not holding down inflation.
Harker says “nothing should be taken off the table” in terms of the Fed raising rates, but indicated that the board is likely to remain cautious in the near term
Risks, according to Harker, tilt toward the downside, but not excessively so. “We have robust growth in employment,” he added.
Harker would not speculate on the use of negative interest rates, if the U.S. economy tanked. Japan and Europe have resorted to negative rates (a central bank essentially paying member banks for their money.
Asked in a question and answer period about student debt, Harker sees worrisome trends about student debt extending to parents and even grandparents as well as graduates.
More analysis is needed is needed to understand the impact of student debt on the economy and trends such as the impact of lower state support of higher education.
The event, which features instant polling of the audience via cell phone, showed attendees remain somewhat confident about the economy, despite the downturn of the stock market. A majority of those responding to the poll see the economy remainings stable.
However, a sizable minority of those responding to the poll are concerned about the future course of the economy.
Washington, D.C.-based investment firm owner, Michael Farr was also upbeat on the economy, citing lower consumer debt, a drop in energy prices and rising housing prices. Farr is a long-time speaker at the annual forecast.
It was the first time in more than a decade that weather had affected the event, which is held early in the year.
As has been the case in his remarks at previous Lyons-UD forecasts, Farr continues to be concerned about income inequality and its impact on the world economy.
That concentration can lead to social unrest and the reality that the small number sfamilies that control a majority of the world’s wealth cannot spend money rapidly enough to aid the economy, he said.
One of the speakers, liberterian humorist-author P.J. O’Roarke, could not attend, after being unable to fly in from Texas.
The event was delayed an hour as the bricks at University around Clayton Hall on the University of Delaware campus remained on the slick side.
