With Thanksgiving, the presidential election and Hurricane Sandy all behind us and the hoped for positive resolution of “fiscal cliff” deliberations forthcoming in December, 2013 appears to be shaping up as a real “Lucky Thirteen” year for the US and Global economies. The secular decline in residential real estate values appears to have ended and because mortgage rates will remain low for most if not all of 2013, could we be set for break-away economic growth? We were taught many years ago in business school that it is important for executives to have a view of the direction of interest rates but are there any reliable ways to do that?
My favorite professor, at the Stonier Graduate School of Banking, Ed Siegfried, PhD, keeps track of economic indicators and encourages his clients and students to do the same thing. Regularly keeping track of key economic indicators makes it much easier to view changes in key indicators that can signal important economic inflection points. Dr. Ed’s Economic Chart is a handy tool for anyone to review and study on a regular basis. Armed with good information an executive decision maker can greatly enable the achievement of strategic goals for his or her business or university.
Take a look at the most recent version of Dr. Ed’s Economic Chart —what does it tell you?
Here are a few quick observations of the trends it clearly reveals:
• Housing Starts are UP
• GDP is increasing
• Unemployment is decreasing
• Rates are stable at all-time lows
• Inflation is very low
Dr. Ed urged us to look at the data and then form our own opinion about the direction of the economy so that we could be effective executive decision makers not adherents to sentiment. Based upon the trends we are seeing now it is apparent that the economic indicators are “bullish”. Hiring should be up in an environment like this and assuming Congress resolves the threat of the “fiscal cliff” and we can avoid being drawn into a new war, we should be in for quite a nice period of firm economic growth during 2013-14.
Here is what I think this means for KULPER Clientele—-higher education institutions with a focus on research and high quality education and corporate innovators focused on bringing new and better products to market.
• FED Government Agency Funding for Sponsored Research Grants will be UP
• Enrollment will be UP
• Long term Debt/Bond funding availability will improve//but slightly higher interest rates are likely after mid/late 2013 as economic growth rates accelerate and the bond market responds.
• New product innovation will accelerate and create important competitive advantage/economic growth—this will be a 3 to 5 year trend.
• Hiring of top talent will be increasingly challenging as the economy gains momentum and the unemployment rate drops.
• Factory utilization which is running close to 80% right now will continue to increase; new factories will be built and fitted out with state of the art production equipment to accommodate re-tooling requirements.
There are more conclusions to be drawn from the data, so I would encourage you to do your own analysis and make use of these objective “headlights” to illuminate your thinking and decision making and then move forward with confidence.