Around 500 bankers and others following the financial industry met in Richmond last week to hear two speakers offer their insight to economic signs for 2015. John Reinhart, CEO/Executive Director of the Virginia Port Authority, and Jeffrey M. Lacker, President of the Federal Reserve Bank of Richmond, both spoke during a luncheon hosted by the Virginia Bankers Association and their sponsors.
Here is a summary of Mr. Lacker’s speech:
- GDP growth has averaged a low 2 ¼ percent since the end of the recession in 2009 because of 2 primary factors: 1) Now that the flow of working baby boomers has trickled down, population growth within the prime working age group of 25-54 is in decline; 2) Productivity per employee has decreased and its 1.4% annual increase is well below pre-recession averages.
However, there are reasons to believe that growth in GDP could rise to between 2 ½ and 3 percent this year:
- Recent increase in consumer spending, decreases in personal savings, and employee confidence in finding employment shown by “quits” being up 20% could indicate economic growth ahead. Many key labor market indicators have also strengthened in support of 2015 economic growth.
- The economy still faces risk though: a sluggish housing market, potentially weaker exports and decreased government spending could work against any growth in the economy.
- Inflation is currently below targets of 2 percent but is likely to move closer to 2 percent after energy prices stabilize.
- Appropriate path for interest rates is a big unknown but at some point the rate will rise and “economic outlook can change rapidly, and judgments about appropriate policy need to respond accordingly.”
To me, it sounds like a positive economy in 2015 has some hope, but there are still many unknowns. One sure way to stay ahead of the game is to invest in your brand. Now more than ever, the way you look from the road makes an impact on people doing business with you…or not. Make your economic forecast brighter with new signs in 2015!