Economic Growth Steady in 2017
Economist shares "optimistic" forecast for 2017
[Pictured above, Andrew Bauer, senior regional economist with the Federal Reserve Bank of Richmond and Elizabeth Cromwell, president of the Frederick County Chamber of Commerce.]
Chamber of Commerce members got a tutorial on the Federal Reserve and some cautiously optimistic news about the outlook for the 2017 economy this week.
About fifty people gathered in the meeting room above Brewers Alley in downtown Frederick Wednesday night to learn about the Federal Reserve from a local banker and hear from a senior economist about the what to expect in 2017.
Richard Miller, president and CEO of Woodsboro Bank, served as director of the Federal Reserve Bank of Richmond from 2014 to Jan. 1, 2017. The Federal Reserve, he said, is the central banking system of the U.S., and was created in 1913 to provide central control of the monetary systems in case of a financial crisis.
The system is divided into 12 districts. Maryland is part of the 5th District, represented by the Federal Reserve Bank of Richmond and encompassing South Carolina, North Carolina, Virginia, Maryland, Washington, D.C., and most of West Virginia. The bank’s objectives, as defined by the Federal Reserve Act, are to ensure maximum employment, stable prices, and moderate long-term interest rates.
As a senior regional economist for the Federal Reserve Bank of Richmond, Andrew Bauer, Ph.D. oversees research and regularly conducts interviews with business and industry representatives. The comprehensive data collection process keeps the Federal Reserve on top of not only what’s happening now, but on what’s trending for the future and helps put the data into context, he said.
And the future isn’t looking so bad. Although the economy didn’t experience the big rebound predicted after the 2008 recession, it’s been growing steadily. At just above 2 percent, growth is expected to continue.
Productivity growth has slowed, however, an outcome Bauer said economists cannot fully explain. He remains optimistic, he said, because consumer spending is at 70 percent and job growth remains “solid.”
Growth of the labor force, however, is slowing as baby boomers age out of the workplace. An average of 150,000 jobs each month is good, although not at the numbers people generally expect as evidence of a strengthened economy. At some point, as the working-age population numbers dwindle, Bauer said, 70,000 new jobs a month will be “a good number,” and enough to keep job growth steady.
Business investment, which fell between 2012 and 2014, appears to be picking up, indicating a growing confidence in the economy. With consumer spending up and business investment up, the stage is set for balanced growth in 2017, Bauer told the group.
Although he didn’t talk much about the political climate’s effect on the economy, Bauer did say business leaders may enjoy less restrictive regulations in the Trump era.
Predicting the long-term fiscal position of the federal government is “very challenging,” Bauer said. The future liability for the federal government will likely be in the area of healthcare, including Medicare, Medicaid, CHIP, and Veteran’s Health Administration.
“There’s a lot of money spent on healthcare, and at some point it could swamp the entire budget,” Bauer said.
