Economists offer tempered enthusiasm for 2016
Experts from faith-based schools preach caution, lowered expectations.
If there was excitement about the economic forecast for 2016, it was tempered inside the Gainey Conference Center at Cornerstone University last week.
Economic experts from four of West Michigan’s faith-based colleges preached caution and lowered expectations for the next fiscal year at the Economic Symposium at Cornerstone Wednesday.
As the nation’s economic growth begins to stagnate, 2016 could be rockier than some expect, possibly even with a very low chance of slipping into another recession, cautioned Brad Stamm, Cornerstone University economics professor and chair of the business division.
Stamm tied the situation in the United States to the ongoing recession in Japan and noted the uncertainty.
“We’ve got federal inaction, excessive debt, all sorts of uncertainty with our health care system. If a Republican (presidential) candidate is elected, then for better or worse, there will be some turbulence in the markets. And then, we don’t live in autarchy, we don’t live in isolation — we’re subject to what’s going on in the rest of the world,” Stamm said.
“I think 2016 may not be as bright as people think, so I’m not going to put the odds real high, but the possibility of going into a recession — which, if you want to define it, is two quarters of negative growth — could possibly happen in 2016.”
Stamm’s fellow panelists were somewhat more optimistic about the country’s economic future, but they also were concerned about uncertainty in the markets impacting what was once predicted to be a strong year for the U.S.
With more of the baby boomer generation getting closer to retirement, Stamm said, and the labor force shrinking, there likely will be a large impact on the economy as a whole. Though life expectancy is now longer, 65 still is the retirement age for most, and unless there is a large influx of workers in the near future, that discrepancy will create even more difficulty in achieving the type of growth to which the U.S. has become accustomed.
Calvin College economics professor Adel Abadeer, an expert in institutional, cultural and developmental economics as well as the economics of discrimination, said he anticipates economic growth of about 1 or 2 percent over the next several years, but he said he could not predict when the next cycle of recession in the U.S. might be.
Abadeer drew the largest applause from the capacity crowd when he discussed the disparity between white and African-American national unemployment numbers: 4.2 percent for the white population and about 9.5 percent for the African-American population.
“Celebrate the growth, celebrate your low unemployment, but you should share it with our brother and sister — and don’t stop there,” Abadeer said. “Don’t look only at the big picture as a national unemployment rate; you have to go and dissect it and see, ‘Do we all share in the big pie of economic growth?’ And I don’t think so.”
For Todd Yarbrough, economics professor at Aquinas College and an applied microeconomist with emphasis on state and local government decision making, it’s the word “uncertainty” that should trigger the loudest alarm when looking at the forecast for next year. He noted several economic indicators such as the housing and investment markets are beginning to look similar to what was seen in 2007.
“We should be prepared,” Yarbrough said, “and I don’t think it’ll be a big dip if we do see one. It could be a dip that creates some relative economic misery, and this is why it’s really important for us to start tackling these long-term issues — because if we don’t, we’re going to keep going from crisis to crisis.”
Hope College economics professor John Lunn, whose expertise is in microeconomics and economic theory, also stressed the importance of looking at the long term and rejected the notion that the U.S. economy is entangled in a fixed cycle that fluctuates between wild growth and certain recession.
Lunn cited the long process of economic recovery the U.S. currently is undergoing as an example of how each situation is different, and past experiences are not necessarily indicative of what’s to come.
“Sure, (a recession in 2016) could happen,” Lunn said. “Do I think some cyclical force is behind it that’s going to make it happen? No, I don’t think so.”
In his opening remarks, Lunn spoke at length about the encouraging economy in West Michigan, citing Kent County’s 3.1 percent unemployment rate and Ottawa County’s 3 percent unemployment rate, contrasted with the national average of 5.51 percent. He noted Ottawa County’s 4.1 percent employment rate increase was the 36th highest in the country, and Kent County’s 3.1 percent increase also was notably higher than the national average of 2.2 percent.
Lunn said since he moved to West Michigan in 1992, the economy has been in substantially better shape than that of the rest of the nation, “and certainly better than the Michigan economy as a whole — so we can always feel good about that.”