New Wave Of Tech Advances Foreseen
Inflation is under control, economic growth has been solid for four consecutive quarters, and technological innovations that will improve the lives of all are on the way.
Yes, it is safe to say economic futurist Jeff Thredgold is bullish on the future. The president of Thredgold Economic Associates, a Salt Lake City-based consultancy, told attendees of WesCorp's Credit Union Outlook conference here there are many reasons to be optimistic about the economy.
"Inflation will remain a non-event for many years to come. It will continue to run at an annual rate of 1% to 2%," he predicted. "The reason is competition. Companies feel they cannot raise prices or risk losing customers to their competitors."
American companies have invested trillions of dollars in technology, he continued, and the result is a "sharp" increase in productivity at the same time the Internet has reduced the cost of doing business for many.
"The U.S. still is the dominant global economy- more so than at any time since the 1950s," he declared. "America is the leader in several areas, including technology, transportation, telecommunications, energy, entertainment and biomedical."
As for technology, "You ain't seen nothing yet," he promised. High-capacity fiber optic cable is replacing copper wire, which is expanding the spread of broadband. Silicon chips are getting smaller, and computers are running faster.
"We are five months away from a special telephone that will translate from English to one of several languages. In 18 months, we will see sunglasses that will translate spoken Japanese to written English across the lens, which will make international business travel much easier. An incredible future awaits us," he added.
When third quarter gross domestic product figures are released in a few weeks, Thredgold expects GDP growth will be about 3.25%. "The estimate had been for 3.5%, but the effects of multiple hurricanes on Florida will hold it down."
Thredgold dismissed talk of a "jobless recovery." He said the U.S. economy has added 1.5 million jobs in the last 12 months. And while the payroll survey suggests George W. Bush will be the first president since Herbert Hoover to suffer a net loss of jobs during his four years in office, Thredgold said, "I would suggest those numbers are not entirely accurate." He pointed to the household survey, which sharply contradicts the payroll report- noting a rise in total employment over the past three-plus years. The discrepancy comes from the payroll survey not counting the large number of Americans hired as contract workers and employed by small businesses, he asserted.
"Small business owners are frustrated by their inability to fill open positions with skilled workers."
Not All Rosy
Access to trained labor is important, he said. In 1990, college graduates earned 25% more than high school graduates. Today, that figure is 70%.
But not all is rosy. The U.S. is paying $750 million every day in interest on the federal deficit. Thredgold said the recession, tax cuts and the global war on terrorism combined to make a "perfect storm" that have brought the deficit back. While it is the largest deficit in history in terms of dollars, it is not nearly the largest in terms of percentage of GDP.
"If Congress can reduce spending, or if the president-whoever it is-can use the veto power, we can reduce the deficit."
Interest Rates Rising Slowly
The day before Thredgold addressed the WesCorp conference, the Federal Reserve raised the federal funds rate to 1.75%-the third quarter-point increase this year.
"The Fed would like to get the target rate up to 3% by the end of next year," he said. "The Fed will continue to raise the rate if job creation improves. If job creation goes up, it might be 2.5% by the end of this year. If the job picture is softer, the raise won't be as high."
Even with the federal funds rate climbing, Thredgold said he doesn't see 30-year mortgage rates hitting 7% or 8% any time soon.
The credit union movement is "alive and well," Thredgold said, as is its future. "People like to be called by name."
CUs must be vigilant against taxation, Thredgold said, but he doesn't think members of Congress will risk losing reelection by angering millions of credit union members to raise a relatively small amount of revenue.