Economic forecast: Recovery continues, with 2022 slower than 2021

BOULDER — One of Rich Wobbekind’s final slides at the 2019 Economic Forecast — Boulder & Beyond event, Jan. 17, summed up a growing list of headwinds for the economy, but economic growth is expected to continue. Wobbekind, executive director of the Business Research Division at the University of Colorado Boulder’s Leeds School of Business, delivered his 2019 economic forecast before a crowd of about 420 people at the Embassy Suites in Boulder. The annual event is presented by the Boulder Economic Council. “I guess I’m smiling, I don’t know,” Wobbekind quipped at the outset of his presentation, responding to Boulder Economic Council executive director Clif Harald’s introductory description of Wobbekind’s demeanor. If Wobbekind was smiling, it was because “Overall, the picture is pretty positive,” he said, with government spending “pushing the economy forward” in 2018. Unemployment remains low, he noted, with consumer spending strong. But that latter point illustrates a danger for the nation’s economy. Wobbkind included a slide that said, “Attention: “This presentation is not being updated, due to the lapse in Federal funding,” drawing laughs from the audience. That wasn’t just a joke, however, as certain economic data — including final consumer-spending numbers for December — have not been released due to the ongoing partial government shutdown, which itself can reduce economic growth. Nonetheless, Wobbekind’s forecast is for continued growth in the new year, though at a slower pace. Real gross domestic product increased at a robust annual rate of 3.5 percent in the third quarter of 2018, but that pace is expected to slow in 2019. “We think that GDP is slowing, not just due to the lapse in government funding,” Wobbekind said. He noted that the effects of the federal tax cuts, which functioned as a stimulus, are “starting to wane,” predicting that the nation would return to a growth rate of 2.5 percent to 2.6 percent. Growth in the U.S. workforce is much smaller than in the 1980s or 1990s, he said, making growth above 2.5 percent “a very difficult thing to do,” he said. Wobbekind said that the level of unemployment — 3.9 percent nationwide — should have slowed growth. He noted that 6.7 million jobs remain unfilled across the country, down slightly from a peak of 7.1 million unfilled jobs a few months ago. But low unemployment has been mitigated by higher labor-force participation. “We’re squeezing as much out of the workforce as we can,” he said. He said that job growth — 300,000 jobs were added in the United States in December, beating economists’ expectations — points to a continued strong growth. Additionally, consumer debt is at its lowest level in 25 years as a percentage of income. “The consumer is in pretty good shape,” Wobbekind said. “We’re seeing strong wage growth, strong employment growth and strong income growth,” he noted. “It’s very difficult to be talking about a recession in the near term unless we have some really big exogenous shock to the system.” Economic headwinds nationally include interest rates, […]

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