Business Survey Committee chairs Norbert Ore, C.P.M. and Anthony Nieves, C.P.M., presented ISM's semiannual economic forecast on Tuesday morning, May 8 at ISM's Annual Conference in Las Vegas, Nevada. ISM's survey members forecast that both the manufacturing and non-manufacturing sectors will continue to grow but at a slightly slower rater than members predicted in both December 2006 and April 2006. Click here to see the full Semiannual Economic Forecast.
John E. Silvia, Ph.D., chief economist for Wachovia Corporation, and R. Keith Schwer, Ph.D., director of The Center for Business and Economic Research and a member of the UNLV Economics Department faculty, presented their vision of current and near-future economic activity.
Dr. Silvia illustrated, through showing housing slowdown, business investment activity, and consumer spending, that economic activity is slowing down in typical mid-business cycle fashion. This evidence does not indicate a coming recession. Employment numbers continue to be fairly solid. Personal income is following the same 20-year trend we've seen since 1982. Jobless claims are still fairly low. Computer literacy as well as college education are the skills employers will continue to look for.
He also mentioned that global economic factors continue to impact our environment. Foreigners buy 40% to 45% of all corporate US bonds. Equity demand for US assets is driven a lot by foreign investment.
Dr. Schwer talked about the local Las Vegas and Nevada economies as well as the country's current situation. While home sales are trending negative, this is to be expected as there was a huge build-up in residential construction. He feels the numbers are not as grim as some media might lead us to believe. There are also positive numbers, such as the increase of 3.7% in hourly wages on an annual basis. Inflation rates are acceptable; oil prices seem to be holding; and the yield curve is also acceptable.
Business investment declined ahead of the 2001 recession, but is now still aboe zero. Business investment is the most volatile component of GDP spending. As far as consumer spending is concerned, even if the drop in car purchases stabilizes, or even remains at a slight decline, if consumers are still purchasing cars, the outlook is good.
The two chairs, as well as the two guest economists, all agree the economy is growing but at a bit slower rate.