(Direct Newsline) Economically, the next three years will be better than the past three years, a trend that should start in the fourth quarter of 2003, according to Mark M. Zandi, chief economist at Economy.com.
While he acknowledged “that’s not saying much,” Zandi cited three reasons behind his optimism. First, the government is stimulating spending through a variety of tax cuts, agrarian subsidiaries, unemployment benefits, and military spending.
Second, the Federal Reserve has been aggressive in lowering rates, and as a result consumers have more cash through mortgage refinancing. While consumers are using part of it to pay off debts, they are also investing in a variety of home improvements and other spending.
Finally, productivity growth has yielded near-record profit levels, and margin rates are increasing as well. Zandi sees this as stimulating a significant amount of information technology spending, as well as a Dow average that will hit 11,000 before it drops to 8,000.
But this recovery is fragile, and if industry predictions regarding 2 million jobs being lost as a result of restrictions on outbound telemarketing have any validity, “that will shoot holes in the theory,” Zandi said during his Sept. 9 keynote presentation at the Direct Marketing Association’s B-to-B Marketing Conference.
“Losing 2 million jobs would be wrenching, and it’s very possible the economy would be back in recession,” he added.
But should the effects of outbound telemarketing restrictions on the economy be muted, Zandi expects advertising and travel spending by industry to begin rising. Job growth would follow, as companies start looking at previously shelved projects and increase staffing in order to accomplish them.
Manufacturing jobs will continue to hemorrhage, but that’s not necessarily a bad thing. According to Zandi, Americans will not be able to compete on a cost basis with Asia for the low level of wages workers overseas will accept to produce goods. Instead, Americans should focus on the administrative functions that support good production, such as satellite systems that track shipping, and accounting and supply chain management oversight functions.
Of course, his forecast for growth assumes that businesses do what he anticipates, namely hire employees to fulfill these functions. And he acknowledged that these functions will rely on an educated work force – one that may require substantially more investment than is currently allocated to it.
There are bright spots in the current picture. Zandi noted that the two largest age groups in the country are 44-year-olds and 14-year-olds, who are assumedly the offspring of the 44-year-olds. This melds nicely with his observation that two sectors that have seen growth are healthcare, as one segment ages, and K-12 educational services, an industry that services the other.
Repo men, and credit and collections professionals have also experienced growth, as have economists. “When the economy is good, you forget about us,” Zandi said.