Bowers forecast

For more information, contact Jeff Bendix, 216-368-6070 or jxb34@po.cwru.edu.

Posted 12-10-99

Good economic times will continue to roll, says CWRU professor

CLEVELAND -- The American economy will continue to grow and should have no trouble setting a record for continuous expansion, according to David A. Bowers, professor of banking and finance at Case Western Reserve University's Weatherhead School of Management.

Speaking December 9 at the Weatherhead School's annual alumni luncheon in downtown Cleveland, Bowers predicted that the nation's Gross Domestic Product will grow by 5% in 2000, compared with what is expected to be 5.5% growth for 1999.

Bowers believes the unemployment rate in 2000 will average 4.3%, compared with what will probably be 4.2% for 1999. The nation's consumer price index (CPI) -- the main barometer of inflation -- will be 2.3% higher by December 2000. For 1999 it is expected to rise by 2%.

"Next month will be eight years and 10 months we have gone without a recession. That is the longest time the nation has gone without a slowdown since the government started keeping economic records in 1854," Bowers observed.

Meanwhile, he added, "the stock market continues to amaze those of us who believe in gravity."

Bowers believes the unprecedented expansion has come about because it has not depended on "easy money" -- injecting money into the economy through government spending. "Monetary and fiscal policies have been restrictive," he said. At the same time, the Federal Reserve, which controls short-term interest rates, has changed them only gradually, preventing major shocks to the economy.

Bowers also credits the Federal Reserve with becoming more open in its policy decisions, announcing them immediately rather than waiting weeks as it did previously.

Rounding out Bowers predictions are the prime lending rate, which he predicts will be 8% next year, and the average rate of return on Treasury bills, which he believes will be 5%.

View a summary of Bowers' predictions for 2000, plus a scorecard of his 1999 predictions.

Also at the luncheon, the Weatherhead School presented its outstanding alumni achievement and Allen C. Holmes Community Service awards for 1999. The alumni achievement award went to Joseph A. Sabatini, managing director of J.P. Morgan & Company in New York, a member of the class of 1981. Joseph A. Troxell, a second-year student, received the Holmes community service award, established to honor students involved in community service projects. Troxell coordinates the Weatherhead School's Habitat for Humanity project.

-CWRU-