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U.S. economy continues to expand, but at a slower pace, reaching about 2 percent growth in 2020
INDIANAPOLIS -- The U.S. economy will continue to expand for a 12th consecutive year in 2020, but by only about 2 percent and struggling to remain at that level by year's end. Indiana's economic output will be more anemic, growing at a rate of about 1.25 percent, according to a forecast released today by the Indiana University Kelley School of Business. Over the past year, political dysfunction and international trade friction have disrupted supply chains and eroded both consumer and business confidence. U.S. employment has grown during 2019 but will decelerate throughout 2020, well short of 150,000 jobs per month and possibly to about 100,000 by year's end. A tight labor market will continue to be an issue for many companies. "The total number of job openings in the economy peaked in late 2018," said Bill Witte, associate professor emeritus of economics at IU. "Average hours worked have been flat over the past year, and auto sales have been flat for nearly two years. Given the reliance of the U.S. economy on consumer spending, these are disturbing signs. But they are vague signs, and not enough to convince us that the end of the expansion is in sight. "We expect that growth will be weaker than in the past two years, and this outlook is likely a best-case outcome," he added. "There is massive uncertainty in the current situation." The Kelley School presented its forecast this morning to Indianapolis community and business leaders at IUPUI. The Business Outlook Tour panel also will present national, state and local economic forecasts in seven other cities across the state through Nov. 20. Indiana's more meager economic growth expected in 2020 can largely be attributed to the outsized presence of manufacturing and particularly tight labor markets, said Ryan Brewer, associate professor of finance at Indiana University-Purdue University Columbus and author of the panel's Indiana forecast. Manufacturing contracts more rapidly versus other areas of the economy, and tight labor markets limit employers' capacity to grow, he said. Expectations about business investment have fallen short, and corporations have been buying back stock instead of making capital investments. The trade war with China and slowing global expansion have also affected state manufacturers. The world is about to record its slowest economic growth since the financial crisis of 2009. Next year, global growth is projected at 3.4 percent, with downside risks continuing to build. China and the European Union each face structural issues amid tariffs imposed by the United States. Brexit remains unresolved. Recent data from the Institute for Supply Management showed that manufacturing activity has slowed to its lowest rate since the beginning of the Great Recession. Indiana has sought to diversify its economy in recent decades, but manufacturing output represents nearly 28 percent of gross state product. Indiana continues to lead the nation in manufacturing employment, with more than 17 percent of its jobs in that sector. "Constrained by a historically tight labor market, Indiana is expected to experience slow growth in jobs and gross output, along with the possibility for continued rising wages," Brewer said. "With fewer and fewer available people to hire, tightness of the Indiana labor markets will serve as a drag to output and employment growth." The outlook for the Indianapolis-Carmel-Anderson metropolitan statistical area is slightly better, with expected growth between 1.5 and 2 percent. "Indianapolis continues to draw in talent and investment that should help it exceed the overall state level of growth," said Kyle Anderson, clinical assistant professor of business economics. "However, there is risk that weakness in the broader economy, and especially weakness in manufacturing, could make this forecast too optimistic." Other highlights from the forecast: The national and state unemployment rates will hold steady. The nation's rate could be below 4 percent by year's end, and the state will stay at or below full employment through 2020. Inflation will rise and end 2020 close to the Federal Reserve's 2 percent target. The stock market will struggle to get average returns with headwinds from trade, supply chain disruption and policy uncertainty. Earnings continue to exceed expectations, yet lack of definitive trade consensus continues to drive headwinds. Interest rates will remain low. The 10-year Treasury rate should stay below 2 percent and mortgages below 4 percent. Speculative grade bond yields have been rising, indicating increased risk of insolvency for marginal firms. Entry-level wage growth could cause costs to rise, earnings to fall and growth to stagnate for firms heading into 2020. Energy prices will be relatively stable, with average prices similar to those in 2019. Business investment will remain weak, although a little improved from this year. Housing will achieve a meager increase, ending two years of negative growth. Government spending will grow, but much more slowly than the past year, as the impact of the 2018 budget deal ends. The starting point for the forecast is an econometric model of the United States, developed by IU's Center for Econometric Model Research, which analyzes numerous statistics to develop a national forecast for the coming year. A similar econometric model of Indiana provides a corresponding forecast for the state economy based on the national forecast plus data specific to Indiana. A select panel of Kelley faculty members, led by Indiana Business Research Center co-director Timothy Slaper, then adjusts the forecast to reflect additional insights it has on the economic situation. A detailed report on the outlook for 2020 will be published in the winter issue of the Indiana Business Review, available online in December. In addition to predictions about the nation, state and Indianapolis, it also will include forecasts for other Indiana cities and key economic sectors. Presenting the forecast at the Indianapolis Business Outlook Tour event were Phil T. Powell, associate dean of Kelley academic programs at Indianapolis and clinical associate professor of business economics and public policy; Cathy Bonser-Neal, associate professor of finance; and Anderson.
Is the bubble bursting – and does America need to prepare for an economic slowdown?
With every news story about trade, tariffs, interest rates, global instability and political chaos…comes with it a hint that each incident could take a toll on America’s economy. And it seems that sub-plot may be slowly becoming a self-fulfilling prophecy for the current administration in Washington. A recent article in Forbes pointed out that most key indicators seem to be pointing down. Trump’s monthly job results are decelerating Trump’s job growth falling short of Obama’s last six years Wage growth is the lowest in a year September quarter GDPNow forecast lower than June’s 2.0% result It seems as if all of these ingredients combined, a slow down and potential recession or worse could be looming. Are you a journalist covering the short and long-term outlook of America’s economy? If so, let our experts help with your stories and coverage. Jeff Haymond, Ph.D. is Dean, School of Business Administration and a Professor of Economics at Cedarville and is an expert in finance and trade. Dr. Haymond is available to speak with media regarding this topic – simply click on his icon to arrange an interview.
Inverted yields and a potential recession – are rocky times ahead?
Everything seemed to be going swell. Unemployment was low, the number of jobs was high and the economy seemed to be roaring. Until last week. Yields on two-year and 10-year Treasury notes inverted early Wednesday, a market phenomenon that shows investors want more in return for short-term government bonds than they are for long-term bonds. It's the first time that has happened since the Great Recession and it can be an indication that investors have lost faith in the soundness of the U.S. economy. - USA Today, Aug. 14, 2019 Inversions are usually the canary in the coal mine when it comes to recessions. In fact, this very same incident has occurred in the previous nine recessions since the mid-1950s. How bad will this recession be? Is there any way to reverse course? Is this simply an American issue or will it spread globally? Compared to 2008 – how bad of a situation are we in? There is a lot of speculation and questions being asked. If you are a reporter covering the economy and need an expert to help guide you through the situation and provide accurate information on the state of America’s economy – that’s where we can help. Dr. Simon Medcalfe is a highly regarded finance expert and the Cree Walker Chair in the Hull College of Business at Augusta University. Medcalfe is available to speak with media regarding the economy and its outlook – simply click on his icon to arrange an interview.
Are Germany’s economic walls crumbling? Let our experts explain the potential consequences.
As the saying goes … where there’s smoke, there is usually fire. And as trade wars, Brexit and overall global uncertainty crash like waves across the planet – there might be another sure sign we are headed for a global economic slowdown. Germany, the engine that runs Europe, may very well be in recession. “A technical recession is defined as two consecutive quarters of negative growth, and Germany saw a 0.1% drop in the April-to-June period. In its monthly report, the Bundesbank said that with falling industrial production and orders, it appears the slump is continuing during the July-to-September quarter. “The overall economic performance could decline slightly once again,” it said. “Central to this is the ongoing downturn in industry.” Deutsche Bank went further Monday, saying “we see Germany in a technical recession” and predicting a 0.25% drop in economic output this quarter.” August 20 – Associated Press So, what will this mean for the EU, and economies far and wide? Do Americans need to be concerned? Is this just a stumble or is the world about to fall into another economic collapse? If you are a reporter covering the economy and need an expert for your stories – let us help. Jeff Haymond, Ph.D. is Dean, School of Business Administration and a Professor of Economics at Cedarville and is an expert in finance and trade. Dr. Haymond is available to speak with media regarding this topic – simply click on his icon to arrange an interview.
It was a train running full speed and showed no signs of stopping – but America’s economy hit a bump last week and it sent a lot of people from Wall Street and beyond into a panic. The 800-point drop in the Dow Jones seemed to be the first sign of another severe recession. But before everyone cashes out, experts from Western Governors University are hoping we take a look back through the ages before rushing to worry. “What does history teach us? Even before the Great Depression of the 1930s, Nicolai Kondratieff discovered that the capitalist economy, going back to the 18th century was characterized by waves, or business cycles,” says Dr. Rashmi Prasad, Dean and Academic Vice President of Western Governors University's College of Business. “The Federal Reserve, under leadership of Ben Bernanke, claimed that while the business cycle had not been repealed, a ‘Great Moderation’ had emerged in the world post-1982. Independent central banking and the rise of the service economy were among the reasons cited. In a great irony of history, Bernanke was front and center as Chairman of the Federal Reserve during the ‘Great Recession’ of 2008-2009. Business cycles seem to be inevitable for capitalist economies. Will we return to the Great Moderation of 1982-2007, or are we in a new period of regular Great Recessions? Central Banks stabilize and soften the down-cycles of recessions, but the price of managing the Great Recession of 2008-09 has been the dramatic expansion of central bank balance sheets–no new investment cycles–property or finance often leads to recession.” So, where do we stand and what can we expect in the short-term? Prasad adds this perspective: “Conventional economic thinking indicated inflation by now, which may have added to interest rates and constrained the amount of debt that was sustainable. Rapidly rising interest rates posed the risk of a deep and extended downturn. If interest rates can be managed and kept low, then the next down-cycle could be shallowed and prolonged as monetary policy has little scope and fiscal deficits are already very high. Risks for a major downturn exist in extremely high debt levels and central bank balance sheets, but still may be a decade or two away, awaiting triggers that we cannot yet predict.” Are you a journalist covering the economy and do you need expert perspective and opinion for your stories? That’s where Western Governor’s University can help. Dr. Rashmi Prasad is Dean and Academic Vice President of Western Governors University's College of Business. He is an expert in the fields of economic and financial data and business analytics. Dr. Prasad is available to speak with media regarding the state of America’s economy – simply click on his icon to arrange an interview.
Cybersecurity expert aims to protect the power grid by hacking would-be hackers
For hackers, the U.S. energy grid is a treasure trove of classified information with vast potential for profit and mayhem. To be effective, the power grid’s protection system has to be a bit like a hacker: highly intelligent, agile and able to learn rapidly. Milos Manic, Ph.D., professor of computer science and director of VCU’s Cybersecurity Center, along with colleagues at the Idaho National Laboratory (INL), has developed a protection system that improves its own effectiveness as it watches and learns from those trying to break into the grid. The team’s Autonomic Intelligent Cyber Sensor (AICS) received an R&D 100 Award for 2018, a worldwide recognition of the year’s most promising inventions and innovations. “An underground war of many years” Manic calls foreign state actors’ ongoing attempts to infiltrate the power grid — and efforts to thwart them — “an underground war of many years.” These criminals aim to enter critical infrastructures such as energy systems to disrupt or compromise codes, screens login information and other assets for future attacks. The nightmare result would be an infrastructure shutdown in multiple locations, a so-called “Black Sky” event that would erase bank accounts, disable cell phones and devastate the economy. In that scenario, engineers would have less than 72 hours to restore the grid before batteries, food supplies, medicine and water run out. With high stakes and increasingly sophisticated attackers, artificial intelligence and machine learning are key to respond to the challenges of protecting the grid’s interconnected systems, according to Manic. “Hackers are much smarter than in the past. They don’t necessarily look at one particular component of the system,” Manic said. “Often they can fool the system by taking control of the behavior of two different components to mask their attack on a third.” A nervous system for the power grid Using artificial intelligence algorithms, AICS can look holistically at an array of interconnected systems including the electrical grid and adapt continually as attacks are attempted. It is inspired by the body’s autonomic nervous system, the largely unconscious functions that govern breathing, circulation and fight-or-flight responses. Once installed, AICS acts as a similar “nervous system” for a power grid, silently monitoring all of its components for unusual activity — and learning to spot threats that were unknown when it was first installed. To “hack” the hacker, AICS often deploys honeypots, shadow systems that appear to be legitimate parts of the grid but that actually divert, trap and quarantine malicious actors. These honeypots allow asset owners to gather information that can help identify both a threat and a potentially compromised system. “Honeypots can make a hacker think he has broken into a real system,” Manic said. “But if the hacker sees that the ‘system’ is not adequately responding, he knows it’s a honeypot.” For this reason, the system’s honeypots are also intelligently updating themselves. Manic developed AICS with his INL colleagues Todd Vollmer, Ph.D., and Craig Rieger, Ph.D. Vollmer was Manic’s Ph.D. student at the University of Idaho. The AICS team formed eight years ago, and Manic continued to work on the project when he came to VCU in 2014. He holds a joint appointment with INL.
August is National Breastfeeding Month – Let our Experts Help with Your Coverage
It’s August…a month that celebrates breastfeeding and all the benefits that come with it. Breastfeeding is natural, healthy and cost-effective – and the American public is beginning to recognize a mother’s right to feed her child wherever and whenever she wants. Breastfeeding is a great benefit to the environment and society, according to the American Academy of Pediatrics. Breastfeeding families are sick less often and the parents miss less work. It does not require the use of energy for manufacturing or create waste or air pollution. There is no risk of contamination and it is always at the right temperature and ready to feed. A new website developed by researchers in Canada and Asia showed that the world could have saved $341 billion each year if mothers breastfeed their children for longer, helping prevent early deaths and various diseases, according to a July 12 article from Reuters. Known as the “Cost of Not Breastfeeding,” the online tool used data from a six-year study supported by the U.S.-based maternal and child nutrition initiative, Alive & Thrive. According to Augusta University Health’s Dr. Kathryn Strickler McLeod, breastfeeding protects against a variety of diseases and conditions in the infant, including diarrhea, respiratory tract infection, childhood obesity and much more. Additionally, there are also maternal health benefits to breastfeeding, including a decreased risk of breast and ovarian cancers. If you are covering this topic – let us help with your stories and questions. Dr. Kathryn Strickler McLeod is a nationally recognized expert in pediatric general and adolescent medicine. McLeod is available to speak with media – simply click on the icon to arrange an interview.
It was the testimony that had as much ramp up and hype as a Superbowl or a Star Wars movie. But last week, after Robert Mueller gave hours of testimony in front of lawmakers in Washington…not much has changed. The Democrats are still crying for impeachment over the obvious intonations of collusion and cooperation with the Russians. On the other side, the Republicans are calling it vindication – a truth they knew all along. So, two years later and 16 months before the next election – where to know? Is impeachment the right path for Democrats still looking for blood? Do both sides need to focus on governing and ensuring the economy doesn’t turn? Is it time no for policy and ideas as we all look towards 2020? We are living in interesting times, and if you are a journalist covering this topic – let us help! Mark Caleb Smith is the Director of the Center for Political Studies at Cedarville University. Mark is available to speak with media, simply click on his icon to arrange an interview.
Tuesday November 03, 2020 – it’s 17 months away. For most of us – that is two World Series and at least a one new iPhone released before the date even hits the calendar. But if you are a political junkie or a journalist – that date is the finish line for what is an expected election of historic proportions that is already underway. On the left, there are at least two dozen candidates vying to lead the Democrats. Some are brand name Washington players; some are rising stars and some are long shots – but each is trying to separate themselves from the peloton of politicians hoping to make that big splash in Iowa during the first week of February in 2020. And if Iowa doesn’t provide results – there’s always New Hampshire and then the Carolinas. On the other side, President Donald Trump has already declared his candidacy. He’ll rely on the economy and odds are...hoping his teflon that ensure nothing ever seems to sticks sustains through the next year and a half. Through it all there will be controversy, scandals, rhetoric, policies and promises. And if you are a journalist, you’ll need an expert to help you navigate through it all. That’s where we can help. Mark Caleb Smith is the Director of the Center for Political Studies at Cedarville University. Mark is available to speak with media regarding the long journey to lead the DNC in 2020 and the election. Simply click on his icon to arrange an interview.
Not this time, but expect interest rates to get cut soon – our expert can explain why
It was all eyes on the Fed this week, but when it came to decide, Federal Reserve Chairman Jerome Powell held U.S. Interest rates steady and unchanged. The pressure was on to lower the rates amid serious concerns that the current trade wars and tariff action could start impacting America’s economy and slow it down. Narayana Kocherlakota, the Lionel W. McKenzie Professor of Economics at the University of Rochester wasn’t surprised by the June decision to remain steady. And with serving six years as president of the Federal Reserve Bank of Minneapolis, his expertise and perspective indicates lower rates will come at the next meeting. “I am not expecting a change in policy, which means the interest rates should remain the same. What I am expecting is a lot of discussion, which takes place in secret, about cutting interest rates by a quarter percentage point at their next meeting in July. Why would they do that? The Federal Reserve is tasked with trying to keep inflation at 2 percent and keep unemployment low. Right now unemployment is about as low as it’s been in the past half-century, which is very good. Inflation remains lower than the Federal Reserve would like—it’s been below 2 percent for most of the last seven years. I think they’re mainly worried about risks. There are signs of risk around the world partly due to big variations in trade policy emerging from the White House. So, the Fed is thinking about cutting rates now in order to keep the economy as healthy as possible, if there’s any danger of a recession.” University of Rochester Newscenter. Will lower rates really keep America’s economy humming? Won’t lower rates impact the strong US dollar? And if we are headed toward recession, what else can de done to turn the economy around? There are a lot of questions – and that’s where our experts can help. Dr. Narayana Kocherlakota was the President and CEO of the Federal Reserve Bank of Minneapolis from 2009-2015. As part of his responsibilities in that position, he served on the Federal Open Market Committee (FOMC), the monetary policymaking arm of the Federal Reserve System. He is currently a Lionel W. McKenzie Professor of Economics and is an expert in financial economics, interest rates and monetary policy. Narayana is available to speak with media regarding the economic effects of the shutdown – simply click on his icon to arrange an interview.
