I recently had the honor of welcoming economist Dr. Bill Conerly to Banner Bank’s annual economic forecast breakfast in Portland. As we look to what the economy will bring in 2015, I found his presentation funny, engaging and hopeful.
In a nutshell, Dr. Conerly’s national economic forecast calls for stronger growth in 2015-16, higher interest rates and stable inflation. He cautions about the risk of recession and an inflation-interest rate roller coaster. But there’s more to the story.
Locally and nationwide, economies are poised for growth. Banks have reserves to lend and creditworthy borrowers are on the rise. As borrowers and creditors unite, Dr. Conerly cautioned that the Fed needs to monitor growth carefully and respond at just the right time. Should they tighten too soon, they could trigger a mild yet avoidable recession. By waiting too long, we could suffer an inflation boom followed by bust.
The global economy is less certain, with conflicts in the Middle East threatening oil production. China’s economy, a struggling European economy and uncertainty over the Russian/Ukraine conflict could mean relatively flat economic growth worldwide.
Boom or bust, Dr. Conerly encourages all organizations and individuals to have a recession plan. That way, should the worst happen, companies and households know what to cut and what to preserve. Speaking of households, the coming years should bring more homes to the Northwest. We need 20-40 percent more housing construction to make up for the slump in housing construction during the recession.
The big question is what kind of housing we will need. The Millenials, children of Baby Boomers who account for a large population, want an urban lifestyle achieved through multifamily construction. As they transition into their 30s and family life, will the single-family homes of the suburbs look more attractive?
At Banner, we’re certainly poised and ready for growth. What questions do you have?
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