Two years ago, economist said there would be a recession in 2020. He didn’t count on 2019
The recession that economist Hank Fishkind was forecasting two years ago seems to have evaporated in the face of a humming economy.
Fishkind explained the factors that turned the gloomy outlook around Thursday, during his annual forecast presented to the Bradenton Area Economic Development Corp.
“The year 2019 certainly turned out differently than we expected,” Fishkind told a breakfast crowd of 400, meeting at Manatee Technical College.
“Instead of rising inflation and the Federal Reserve being forced to raise rates, what we got was stable-to-low inflation, a slowing economy, and the fed rate cuts,” he said. “That set the stage for the stabilization and equilibrium we now have and that we enjoyed in the second half of 2019.”
The retreating threat of inflation does not come as a total surprise. During his economic forecast a year ago, Fishkind was already saying that if a recession occurred, it would not be as bad as initially feared.
Other good news reported by Fishkind included the outlook that inflation remains relatively tame, and that wages and incomes are beginning to increase modestly.
The modest wage growth is attributed to the shortage of skilled workers, and the difficulty that employers have had for several years in filling positions.
The law of supply and demand also surfaces in the nationwide shortage of single-family homes, helping to drive up prices, he said.
In December, the median price for single-family homes in Manatee County increased by 5.2 percent to $325,000, a post-Great Recession high, according to the Realtor Association of Sarasota and Manatee.
Fishkind seemed skeptical about the benefit of tariffs in the trade war between the United States and China, adding that they actually cost households about $700 a year.
“It’s a tax on households. Someone else doesn’t pay it. We pay it,” he said. “This policy may have other benefits, but in the short term it doesn’t. I don’t think it will work in the long term.”
One area to watch is the stock market, which has been rocking along at all-time highs, he said, hinting at an inevitable future correction.
Fishkind also waded into the 2020 election. The performance of the economy could have a significant affect on who comes out on top, and could also be affected by who wins the election, he said.
Fishkind said he likes Moody’s election model, which seems to point to Democrats retaining the House and Republicans keeping the White House and Senate. But the model is not infallible: it predicted a Hillary Clinton victory against Donald Trump.
The election will likely come down to the performance of the economy, and voter turnout, particularly in about a half dozen swing states, he said.
Afterward, Nick Roberts of BBVA International Bank, said that uncertainty nationally and across the globe has led to hesitancy by businesses to invest in expansion. There also continues to be caution lingering from the devastating affects of the Great Recession, he said.
Lee-En Chung of Ivy Ventures said she was encouraged by Fishkind’s positive outlook on warehouse and retail development, considering that she has warehouse projects in development in Sarasota and Venice.
