By Kathy Canavan When Lyons Companies used a cell phone app to poll the more than 400 attendees at its 2016 Economic Forecast and posted the responses on an overhead screen, audience surprise was sometimes ...
[caption id="attachment_17345" align="aligncenter" width="1000"] The audience at the Lyons Companies' 2016 Economic Forecast surprised itself when its answers were flashed on a screen. Most said they'd vote for Trump and believe the stock market will rise in 2016.[/caption]
When Lyons Companies used a cell phone app to poll the more than 400 attendees at its 2016 Economic Forecast and posted the responses on an overhead screen, audience surprise was sometimes audible.
Here are the stats from an audience that was 22 percent business owners, 26 percent executives or managers, 23 percent employees or independent contractors, 7 percent academics, 13 percent students and 5 percent retirees:
Trump voters: 36 percent Cruz voters: 29 percent Clinton voters: 22 percent Sanders voters: 13 percent Don't trust Wall Street: 73 percent Believe there's a 25 percent change of recession this year: 59 percent Believe the stock market will rise in 2016: 55 percent Believe interest rates will stay the same in 2016: 52 percent Believe interest rates will rise in 2016: 37 percent Confident about the economy: 46 percent Very confident about the economy: 23 percent Concerned about the economy: 29 percent Very concerned about the economy: 3 percent Believe interest rates won't change:52 percent
The audience came for financial prognostications from Patrick T. Harker, president of the Philadelphia Fed, and Michael K. Farr, a Washington financial adviser.
Farr told them the richest 1percent hold more wealth than the rest of the world combined.
"I can have all the water in the Hoover Dam, and, if I only have a two-inch pipe to move it, I'm not going to have much water," he said. "That's the problem in the economy."
Farr used Northern Ireland as an example. He said anti-British violence dropped off steeply once the economy improved and money got into the hands of average citizens.
"They got some money, and life improved. Things improved to the point that you didn't want to blow yourself up or something stupid," Farr said. "It was, "˜I've got a golf date tomorrow, I can't do that.'"
Addressing the audience who had just seen their own election preferences on screen, Farr said: "I think the polls are saying voters are angry."
Harker said U.S. economic fundamentals are sound, the financial system is in good shape, labor markets are dynamic, income growth is solid and consumer spending continues to increase at a solid pace.
He said the major risk to the economy would be weakening growth in China and extreme volatility on Wall Street.
Harker, who is an alternate on the Fed committee that sets interest rates, said it might be prudent to wait until inflation is stronger before a second rate hike, but he wouldn't take anything off the table at this point.
He was optimistic about housing, with multifamily plans robust and permits for single-family homes at their highest level since the recovery began.
He was not so optimistic about business investment, pegging its growth at only 2.5 percent for the coming year.
Harker predicted inflation might be negative this quarter but will hit the Fed's 2 percent target once oil stabilizes and headline inflation - the measure of total inflation within the economy including commodities - will rise at an annual average pace of 1.5 percent by the second half of the year.
He said inflation could increase if wages increase and oil prices rise. "There is a good deal of anecdotal evidence that firms are planning to raise wages, especially for jobs that are proving to be hard to fill. I do expect some faster wage growth going forward, and accelerating wage growth could translate into more robust inflation," Harked said. "It is unlikely that oil prices will continue to drop, and eventually, they will become a contributor rather than a detractor from inflation."
If inflation does rise, Harker said he's unconcerned. "If we overshoot 2 percent for a while, that's OK with me, because we have the tools to take it down."
He pointed out that the robust employment growth is starting to cause wage pressure.
Harker, former president of the University of Delaware, emphasized the need for workforce development. He said there are unfilled jobs for auto technicians and manufacturing specialists but not enough workers are trained to take them. "The workforce development issue we face as a country really needs careful and very deep investment of a lot of thought," he said.