Last week was dominated by severely cold temperatures and brutal winds, blowing around nearly a foot of snow dumped on most of Indiana. After a few days of a warming trend, however, temperatures in the 40s had melted away most of the white stuff.
On Friday, the Indiana Bankers Association hosted its third annual Indiana Economic Outlook Forum, featuring two outstanding speakers. First up was Dr. Michael Hicks, who is the director of the Center for Business and Economic Research and a professor of economics in the Miller College of Business at Ball State University. The second speaker was Dr. James Bullard, president and chief executive officer of the Federal Reserve Bank of St. Louis and a member of the Federal Reserve’s Federal Open Market Committee (FOMC). The FOMC is responsible for setting economic policy for the United States.
Most of Dr. Hicks’ remarks were focused on the Indiana economy. He reported that he sees continuing improvement for Indiana, resulting from the Legislature’s work to make Indiana a business-friendly state and from the generally improving national economy. He did caution, though, that several localities, primarily those that historically have relied heavily on automobile manufacturing, likely will continue to struggle.
Dr. Bullard provided a recent history of the Federal Reserve’s forecasts vs. actual results. While there were a few big misses among those forecasts, overall the Fed’s record has been fairly accurate. Bullard then offered his thoughts on what the 2014 economy likely will provide. While he covered several components, two of particular significance are the unemployment rate and the gross domestic product (GDP) growth.
The latest unemployment levels had been released just a couple of hours prior to his speaking and showed a level of 6.7 percent. Bullard’s prediction was that the rate will continue downward in 2014 by one-half of 1 percent. Given the movement announced that morning, he indicated that the rate might dip as low as 6 percent.
On the GDP front, Bullard predicted a rate of growth of 3.2 percent. If he is correct, 2014 would reflect the highest GDP growth rate in over a decade.
I certainly hope he is right on both counts. These would be positive steps in our national economic recovery and, when coupled with Dr. Hicks’ remarks regarding Indiana, could make 2014 the bellwether year that marks Indiana’s movement forward as a state economy.
Our economy certainly has not recovered rapidly from the economic crisis. After all, it takes more to thaw out a frigid economy than a few warm rays of sunshine.
S. Joe DeHaven, 01/15/14