Joe Quinlan, Chief Market Strategist of Bank of America, delivered a keynote this morning entitled “2015 Eastside Economic Forecast Breakfast” hosted by Bellevue Chamber of Commerce. To begin, Joe presented data points which demonstrated that the US economy has been relatively stable since 2014. The indicators mentioned included:
•Economy growth 3.5%(2015) vs. 3% (2014)
•Unemployment 5% vs. 5.8%
•Oil $42 per barrel vs. $76
•Euro 1.06 vs. 1.25
•Yen 1.16 vs. 1.24
•10 year treasure yield 2.31 vs. 2.28
Joe held that raising the interest rate is the first step towards normalization. At the same time, he pointed out that a higher interest rate will make the dollar stronger, impacting export business. He then stated that he believes the Fed will raise interest rates in December.
Concerning a global perspective, Joe warned that we need to pay attention to the emerging market; higher interest rates will make returning debts (2 trillion) harder and might create a credit bubble that will in turn yield larger liability for the US. He encouraged us to read The Courage to Act by Ben Bermanke to understand more about the 8-year zero interest rate debates as well as Lights Out: A Cyberattack to understand the vulnerability of our infrastructure. Joe suggested that the Paris incidence last Friday 13th brought increased collaboration between countries against ISIS and that this cooperation is needed to combat global terror.
He reminded us that while eastsiders are positive about 2016’s forecast, we should know that our region has a bit of an economic disconnect with the rest of the nation. There are a lot of states that are struggling with unemployment; for example, TX. For people don’t know about the term “eastside”. It refers to east of Seattle; including Bellevue, Redmond, Kirkland and Issaquah in Washington state. It’s an economically strong region supported by hi-tech companies such as Microsoft, Google, AT&T and T-Mobile. To learn more about the economics of Seattle ‘s eastside, you can download a report from the website of Bellevue Chamber of Commerce.
Overall, I enjoyed listening to Joe and started to wonder the impact of zero interest rate on high rent/housing. However economics is a complicated subject, and when I shared what I learned, I got many differing perspectives concerning his forecast. What are your thoughts about the his predictions and suggestions?