2014 Archives

SMU economists: No slowdown in sight


The following is from Business Writer Cheryl Hall's column in the Dec. 20, 2014, edition of The Dallas Morning News.

December 23, 2014

Al Niemi believes 2015 will be a good year for the U.S. economy, as will 2016, 2017, probably 2018 and maybe even 2019.

“I’m beginning to think this might be the longest expansion in the history of the American economy,” says the dean of the Cox School of Business at Southern Methodist University. “We’re not building in any imbalances. There’s plenty of upside potential. We’re crawling out of a hole and beginning to see the light.”

The longest previous stretch of economic growth lasted 120 months beginning in 1991 and running to 2001. If Niemi proves prescient, that would mean we’re only about halfway through our current growth spurt, with 66 months under our belt.

Niemi was the lead-off speaker at a media briefing that he hosts each December to show off the brainpower of SMU’s business school.

Harvey Rosenblum, professor of business economics, agrees the upward trajectory is likely to continue unless there is another financial crisis started abroad.

“The Federal Reserve is not going to get off of its zero-interest-rate policy until spring or summer of next year,” he says.

But even then, the retired executive vice president of the Federal Reserve Bank of Dallas expects that rates will go up ever so slightly. “We’re talking about monetary policy that still has the pedal to the metal. It’s very hard to fall into a recession when monetary policy is as expansive as it is. The Fed isn’t going to pull the plug.”

The industry experts were mostly upbeat but tempered, expecting most sectors to continue mending but with concerns about consumer debt, government overregulation and the public tax burden.

Housing starts, they said, will be 1.2 million units in 2015, more than double the 550,000 homes begun in the depths of 2009.

But this key economic component is held back by post-subprime regulations that have gone too far and that even bankers don’t understand, says Scott MacDonald, chief executive of SMU’s Southwest Graduate School of Banking.

“If you look at the average person’s ability to get a mortgage today, it’s all but impossible,” says MacDonald. “In trying to protect people with less-than-stellar credit, you’ve made it impossible for them to get a loan.”

Oil prices are likely to stay low, but not so low that they derail the energy industry and the economic boom that it’s creating in energy-producing states like Texas, says Bruce Bullock, director of SMU’s Maguire Energy Institute.

Read the full column.