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Bernard Baumohl has tracked global and U.S. economic trends for several decades.
Now the chief global economist at The Economic Outlook Group, a Princeton, N.J.-based forecasting and economic seminar firm, Baumohl was initially an economics reporter for magazines and newspapers. He covered the White House, Federal Reserve and Wall Street for Time magazine. He later shifted to analysis, and worked at the European American Bank and the Council on Foreign Relations. Baumohl is also the author of a book, “The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities.”
Baumohl recently spoke at an event hosted by the University of South Florida Sarasota-Manatee's College of Business. He talked about economic conditions in the country, and how there are almost two different worlds to study: One is the D.C. Beltway, and the other is everywhere else. “If it would not be for Washington, this economy is poised to grow for another three or four years,” says Baumohl. “There is no recession threat on the horizon and there are no imbalances. All the fundamentals are fine.”
Baumohl spoke with the Business Observer prior to his presentation. Edited excerpts:
Do you expect the national economy to improve, stay the same or slow in 2014?
My forecast for 2014 is that we will experience 3% to 3.5% growth.
The private sector of the economy is actually in pretty good shape. Consumers are relatively upbeat. They see the job market improving, although at an agonizingly slow pace. But as long as companies are ramping up hiring, it gives consumers a sense of job and income security. We've seen the most number of cars being purchased in six years. Consumers are also buying appliances.
What do you project or foresee in the economy for Florida in 2014?
We don't do regional economics, but it does appear that the Florida economy is improving at a faster rate than the national economy. That's because of the recovery in real estate and international trade and people still take vacations down here.
One great anecdote about Florida that shows its fortunes will continue to improve is the fact that one really large American company just moved down to Fort Myers, Hertz. There must be a reason that they moved.
What could derail your forecast?
There is still a bit of uncertainty about what the outlook is and whether the follies in Washington will somewhat jeopardize the recovery. If you are talking about a prolonged government shutdown, who in their right mind would commit themselves to hiring workers or to expanding operations if you are that uncertain about the outlook? Right now a lot of companies are just putting their spending and hiring plans on hold until there's greater clarity as to what will emerge from Washington.
We are also facing a lot more geopolitical risks. That's different from the past. It was only in August that all of a sudden people got nervous that the U.S. was going to get involved in the Syrian conflict.
What is your outlook for job creation?
I think the unemployment rate will continue to go down. We are looking at the end of next year to have 6.6% [national] unemployment. But the job market has the potential of doing so much better. I think companies really do want to accelerate their hiring, but there are a number of factors at work. First of all, the economy is growing way too slowly. When you are growing less than 2%, there's no incentive for companies to go out and start hiring. Secondly, right now, given the uncertain costs of the Affordable Care Act, I think many companies may be reluctant take on workers.
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