The "Will Rogers of Economics" offered his unique blend of economic wit and wisdom, forecasting relatively level interest rates for the next year.
Gene Stanaland, former head of the economics department at Auburn University and president of GSE, an economic and management consulting firm based in Auburn, Ala., predicted GDP would be 3.4% for full-year 2006, then sink to 2.6% in 2007.
He foresees inflation pressures easing over the next 13 months, with the Consumer Price Index (CPI) dipping to 2.5% next year after 3.5% this year.
Of special note for CUs: Stanaland said interest rates would remain level, with the 90-day rate constant at 4.8% this year and next, and the 10-year rate rising slightly to 4.9% in 2007 after remaining at 4.8% in 2006.
Prior to revealing his forecast, Stanaland gave an economics and history lesson that touched on political, governmental and societal factors from the past two decades.
In particular, he noted, "the last five years will go into the record books as one of the most remarkable periods in history," with tumultuous events ranging from a recession, the Sept. 11, 2001, terrorist attacks, the war in Afghanistan and the war in Iraq.
"In addition, there have been three major elections: mid-term, presidential and, last month, another mid-term," he said, speaking just two days after the Nov. 7 election.
"We must understand how Washington works to understand its effect on the economy," he said.
It is these tumultuous years, he said, that continue to shape and mold the country's economy.
According to Stanaland, it is a "heroic assumption" to say any president "handles" the multi-trillion-dollar economy. He likened it to riding a bull. "The best any president from any party can do is hang on," he said.
Presidents "propose," but members of Congress "dispose," he said. In Washington, "politics comes first, and everything else comes second."
As an example, Stanaland said every issue or problem confronting either party's White House first goes through a team of people who are responsible for the next poll and/or the next election.
Another example of politics: Both parties introduce legislation just so the other party will vote against it and they can use it against them in the next election, he said.
"The Democrats have taken charge of both the House and Senate this week. Already, strategy meetings are taking place regarding the 2008 election. The Republicans want the seats back, and the Democrats want to hold on. We've got to learn their language."
Another, more important issue to keep in mind, he added: "The one entity that does have a significant effect on the economy is the Federal Reserve Board."
