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FlemingMartin co-hosted a Chief Economists Panel featuring Ted Egan, Chief Economist, City of San Francisco and Wayne Best, Chief Economist, Visa International.

Every month, FlemingMartin co-hosts an HR Leaders’ Forum and a C-Suite Forum. Our most recent gathering took a look at a day in the life of a Chief Economist and the outlook for our local, national, and global economies. Marty McMahon moderated a fun session that was one of our highest rated of the year. The session was very interactive and our senior guests were able to ask the distinguished panelists many questions. Highlights and takeaways from the panel included:

  • A general consensus that the U.S. economy would continue growing slowly over the next 3 years. Wayne’s forecast for a potential U.S. recession is at 15% which is down from 20% last quarter. Forecast for 2014 GDP growth is 2.8% with a similar outlook for 2015 and slightly higher in 2016.
  • Unlikely to see a 3.5-4% growth year in the U.S. for the next 5-7 years. Our aging population means that spending will be muted.
  • Job growth nationally is very strong but wage growth is muted although median income is rising ($51K to $56K).
  • Fed asset sales will have to be handled very carefully. After tapering begins, we could see a 50-150 basis point increase in interest rates which would end the home sales rally.
  • $0.17 of every dollar spent globally is processed by Visa.
  • Mark Zandi, Chief Economist at Moody’s Analytics was cited as a great source of data and guidance.
  • San Francisco is the only North American City with a Chief Economist. The role was created in 2004 by a ballot initiative and reports to the City Controller which is not an elected office (better for independence). The goal of the office is to report on the economic impact of ballot initiatives.
  • San Francisco’s economy was traditionally built around two pillars: Tourism (mainly confined to Fisherman’s Wharf and Pier 39) and large companies with downtown Headquarters. Now the tech sector has emerged as a 3rd pillar and accounts for 10% of employment in the City.
  • Ted Egan reported that the initiative to increase the minimum wage in San Francisco is expected to cost the City 15,000 jobs.
  • From Wayne Best at Visa: There was an absolute correlation between the 3% downturn in Q1 2014 and the weather. We saw it in our spending data across markets when we compared bad weather locations to those with good weather.
  • Also, from Wayne Best on the BRICs: Brazil is in recession because they did not do the necessary reforms when times were good. Russia = Putin; India is at a 5% growth rate and is reining in inflation at 8-9%. We are hopeful that the country will be able to address their labor and foreign direct investment policies; China’s demographics will guide a slight downslope to a 7% GDP growth—big issues coming with housing bubbles, shadow banking and starting to see the government allow companies to fail. Also saw power consumption reduced in China which means they are not manufacturing as much; Japan had negative GDP in Q2 and has the worst demographic outlook of any country in the world.
  • The most recent housing report showed that 43% of all houses purchased in the U.S. were cash purchases, which is an all-time high.
  • There is a strong correlation between the level of the stock market and spending amongst the affluent (defined as those making more than $100K)
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