Brighter Days Ahead for the Global Economy?
Experts share their views at CBIA’s September economic conference
By Lesia Winiarskyj
With Europe showing nascent signs of a turnaround, the conversation about the world economy is changing, Anthony Chan told a packed room of business executives at The Connecticut Economy on Sept. 6 in Rocky Hill.
Chan is managing director and chief economist at J.P. Morgan Private Client.
“Europe is really the exciting story for the second half of this year: and for 2014. For the first time, we are now seeing positive growth this quarter,” a trend Chan believes will continue.
“This is really signaling to us that Europe is going from contractionary economic growth to positive economic growth.”
With the recent rebound and an uptick in exports, he noted, “consumer confidence in Europe is picking up.”
Economic prospects in China are improving too, he added, and the combined impact of China and Europe’s comeback will be felt in the world’s financial markets and the global economy.
Emerging Markets Weaker
Closer to home, “we’re starting to see wages pick up,” said Chan, who dismissed the notion that job creation is limited to part-time or low-paying work. “Manufacturing is a big star performer today,” he noted, as are professional service industries that also offer higher-wage jobs.
The major point of global economic concern has shifted, Chan pointed out, to emerging markets that have high current account deficits and are financially and politically unstable.
“Foreign direct investment has dried up in some areas,” he said , citing trends in India and Brazil, among others, where there is greater social unrest and “less confidence in reform.”
Nonetheless, Chan’s outlook remains positive. “Global economic growth is going to continue to improve in 2014.”
New Golden Era
Also speaking at the conference were David Walker, former comptroller general of the United States and founder and CEO of the Comeback America Initiative, and David Darst, managing director and chief investment strategist at Morgan Stanley Wealth Management.
Darst believes the path to a new golden era for investors will be paved by a societal push for structural reform, the rise of new industries, “guerilla companies that sell to the planet,” and the millennial generation. (At 80 million strong, Darst says, “they are the new baby boomers.”)
Darst, like Chan, discussed the political and financial landscape in Europe and emerging markets, as well as domestic housing prices, gold, treasury bond interest rates, energy, the Shiller price to earnings ratio, S&P 500, U.S. equity investment performance, and other variables he said investors need to “keep on our radar screen.”
Business Confidence in Connecticut Lagging
In spite of some good news surrounding manufacturing jobs and business profitability, Connecticut employers are still pessimistic about the state’s long-term competitiveness.
Those were some of the findings of CBIA/BlumShapiro’s 2013 Survey of Connecticut Businesses, released at the Sept. 6 economic conference.
Only 11% of businesses surveyed see Connecticut as a positive place to do business, reflecting concerns over the pace of the state’s economic recovery and Connecticut’s ability to compete regionally, nationally, and globally.
Lesia Winiarskyj is a writer and editor at CBIA. She can be reached at firstname.lastname@example.org.
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