Posted 12-5-00
CLEVELAND -- Although some economists are starting to use the word "recession" in their predictions for the nation's economy, two forecasters at Case Western Reserve University's Weatherhead School of Management predict solid, if somewhat slower, growth for the coming year.
Speaking December 5 at the Weatherhead School's 27th annual economic forecast luncheon in downtown Cleveland, David A. Bowers, professor and chair of the Department of Banking and Finance at Weatherhead, said he foresees 4% inflation-adjusted growth for the Gross Domestic Product in the coming year. "Four percent real growth is a good year," Bowers pointed out.
For all of 2000, the economy is expected to grow at a 5.5% clip. The growth rate for 1999 was 4.2%.
Sam Thomas, senior lecturer in banking and finance at the Weatherhead School, echoed Bowers' prediction. "I see a slowdown, but no recession," Thomas said.
Bowers also predicted that the consumer price index next year will grow at a 2.5% rate. That compares with an estimated 3.4% increase this year, a number made somewhat higher by substantial jumps in food and energy prices. Unemployment will grow to 4.3% from this year's estimated 4%, Bowers predicted.
Bowers added that he expects the Federal Reserve Board, when it next meets on December 19, will begin to shift its emphasis from containing inflation to countering signs of economic slowdown. "I think we will see lower short-term interest rates in 2001, but long-term rates will hold steady," he said.
Focusing on the outlook for the stock market, Thomas predicted that the key forces influencing the market in 2001 will be:
Following his forecast, Bowers announced that today's lunch was the last at which he would speak. In his honor, the event was officially renamed the David A. Bowers Economic Forecast Lunch. He was presented with the Weatherhead School alumni association's first annual David A. Bowers Faculty Service Award.
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