June 24, 2010
Dr. Charles Evans on the State of the Economy
Last week, our CEO Jeff Davis attended the Civic Affairs Society Breakfast Forum at the University Club of Chicago. The topic of discussion was “Issues Today and Tomorrow”, with Dr. Charles L. Evans serving as keynote speaker.
Charles L. Evans is the president and CEO of the Federal Reserve Bank of Chicago. He serves on the Federal Open Market Committee and the Federal Reserve System’s monetary policy-making body. Evans has published several articles in financial journals and has taught at the University of Chicago, as well as other universities.
Dr. Evans reported that the gross domestic product is expected to grow at a rate of 3.5% this year. While that may seem slow, 3.5% is considered a moderate rate for a rebound like this one. In the last quarter, the gross domestic product increased, and should continue to increase, thanks to the federal government stimulus, increased inventory consumption, and increased consumer spending. Evans noted that the auto industry alone has seen an increase of 17% in sales.
As evidence of the still-struggling economy, recovery in the job market continues at a snail’s pace. Job increases will come about modestly, while hiring will continue to be slow. Part-time and temporary hiring, however, are at an all-time high.
On a more positive note, inflation is projected to stay at 1.25%, and rise to 1.75% 2012, which is well below Evans’ 2% guideline.
Dr. Evans finished his talk by discussing the European debt crisis. He explained that there will be a lower demand in Europe for U.S. products, and more European imports to the U.S., but Evans feels that U.S. panic over the effects of the crisis are overblown. European exports make up only 15% of our economy. In contrast, trade with Canada alone makes up 18% of our economy.
Overall, the economy is on good footing, according to Evans. Recovery will progress, and Evans is optimistic that there won’t be slippages. The federal stimulus was a strong lubricant in the process of bringing the U.S. up to speed, and recovery could not have happened with out it. That being said, Dr. Evans feels an entitlement program will continue to have drag on the economy as well as commercial real estate. Expect slowdown to continue for some time, but remember that recovery is imminent.
Do you think the U.S. economy is on good footing? Or do you think we should be more concerned about what’s going on in Europe?
