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Economy Is Fragile, Future Hard To Predict, Says Clearview’s Ken Mayland

Friday, November 16, 2012 at 6:18 PM

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The president’s re-election, economic troubles overseas, a looming fiscal cliff here in the U.S…. what a time to be making economic predictions. Ken Mayland doesn’t shy away from the task. He’s a nationally known and respected forecasting consultant based here in Northeast Ohio, and was the keynote speaker at Key Bank’s annual economic forecast breakfast in Independence. Ideastream’s Bill Rice reports.

Forecasting for 2012 was easy, Ken Mayland says, because economic policies had not changed from the previous two years, and so the economic outcome was unlikely to change either.  And sure enough, just as in in 2010 and 2011, growth in 2012 has been well under 3 percent.  Forecasting 2013, he says, is a much different story: much depends on big decisions yet to be made.  But one thing Mayland is certain of: 

{MAYLAND:  “The fact is, I say here, that the economy is dangerously close to another recession.” (:09)}

Mayland says a change in just one or two factors could tip the economy back into recession – for instance, if consumer confidence founders, or businesses decide to slow their inventory growth because of lagging sales.  And that’s just given current conditions. 

{MAYLAND:  “And then, there is this item of the fiscal cliff.” (:04)}

That’s when Bush era tax cuts expire, along with a temporary payroll tax reduction and extended unemployment benefits.  At the same time, Affordable health Care Act taxes kick in, and the much dreaded 10 percent across-the-board sequestration takes effect.  All that, plus a few other expected revenue and spending changes, would create an 800 billion dollar drag on the economy. 

{MAYLAND:  “When you total them up, if the fiscal cliff in its entirety triggers on January first, that would be an 800 billion dollar drag that would hammer the economy.  If that all hit the economy, chances are the economy would crash – not slide – it would crash, it might very well crash the financial markets as well.” (:23)}

Mayland believes that worst case scenario WILL be averted, but he foresees continued sluggish growth in the near and medium term, as a combination of spending cuts and higher taxes that will likely be enacted put a drag on the economy. 

After the program, I asked Mayland if there are bright spots in the economy – especially for Ohio.  One, he said, is the automotive industry, which he predicts will continue to rebound.  Ohio companies that supply and serve the aerospace industry will also do well.  And of course, gas and oil drilling. 

{MAYLAND:  “It’s going to really move the needle on Ohio because the eastern third of the state has these Marcellus and Utica shale formations that can and will be tapped.” (:12)}

Despite optimism for those industries, Mayland says manufacturing in general – a sector Ohio in which Ohio ranks particularly strong - will mirror the overall economy’s sluggish performance.

Bill Rice, 90.3. 

Tags

Economy, Regional Economy/Business - Analysis and Trends

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