Experts talk economic forecast

Though the three experts who came together to speak at the 2013 Economic Forecast event shared a passion for the U.S. economy, they had differing views of the country’s current economic situation.

The speakers gathered last Tuesday at Clayton Hall hosted by the Lyons Companies and the Center for Economic Education and Entrepreneurship’s 2013 Economic Forecast. They spoke after Vice Chairman of the university’s board of trustees John Cochran presented the second annual James B. O’Neil award for Excellence in Economic Education and Entrepreneurship to Richard Struthers, president of Ashford Point Enterprises.

“Serving as the first Delaware Market President at the Bank of America, responsible for local business, civic and philanthropic leadership, Ric Struthers made financial literacy a personal and professional priority,” Cochran said.

Former Congressman and Chairman of the House Financial Services Committee Michael Oxley, who spoke following Struthers’ award, said he has been a longtime advocate of sound financial reporting to increase understanding of the economic  climate.

Oxley said a “glass two-thirds full kind of guy” when it comes to the economy. Despite the enormous issues that need to be dealt with in order to stimulate the economy, he said he believes in its power to bounce back.

Consumers’ “disposable income” spending has reflected an improving economy. Much of this has historically been spent on necessary items such as cars, food and houses. In 1950, he said, 53 percent of “disposable income” was spent on these items, while this year it was only 32 percent.

“So we’ve gone from over half of the spending for necessities—quite an extraordinary achievement,” Oxley said.

Jon Hilsenrath, the chief economic correspondent for the Wall Street Journal, said he believes the Federal Reserve system will play a crucial role in the future of the economy. He said in the past the Fed has been responsible for economic downfalls.

In the ’30s, when the Fed put “too little money” into the economy, it caused a “deep depression,” while when the Fed put too much money in during the ’70s, it caused inflation, he said.

“This gives the Fed enormous power, but also puts it in the position of having a very challenging balancing act,” Hilsenrath said.

Michael Farr, president of Farr, Miller & Washington and the author of “The Arrogance Cycle” and “A Million is Not Enough,” said the economic recovery has been relatively disproportionate to the amount of money the government has put into the economy.

“The recovery has benefitted relatively few—meaning that the top one percent in this country has gotten a lot wealthier,” Farr said.

One of the biggest issues with the economy is for every dollar, approximately 40 cents is borrowed, Farr said. The country cannot go on borrowing so heavily, and the government must learn to function within its means, he said.

While Farr also said the economy has a long way to go before making a full recovery, he said confidence in the future of the United States is slowly improving. When he asked the audience how many people thought the economy would get better or remain the same over the next year, more than half of the room raised their hands.

“I sat last night at this wonderful speaker’s dinner and my table companions were saying, ‘People have a lot of cash, what are they waiting for to start building? To start investing? To start growing again? When will they start hiring?’ And I looked at them and I said, ‘What’s it going to take for you?’” Farr said.