Economist cites reasons to be hopeful of recovery

NATION IMPROVES

By Scott Moyers ~ Southeast Missourian

In addition to the lives that were taken, the terrorist attacks of Sept. 11 made a huge financial strike into the United States, stalling the stock market and causing enormous declines in retail sales, travel and vacation spending.

But, more than seven months later, there are plenty of reasons to be optimistic about a speedy economic recovery, according to Dr. Edmond Seifried, a nationally recognized speaker on economic issues and forecasting techniques.

Seifried, a professor of economics and business at Lafayette College in Easton, Pa., spoke at an invitation-only seminar Wednesday held at Southeast Missouri State University and sponsored by First National Bank.

He pointed to key economic indicators that have been improving since January, including factory production, the unemployment rate and retail and food service sales.

"America is the richest country in the world and it's going to get richer," Seifried said.

The recovery will be driven by several factors, including:

The number of teen-agers, now at the highest level in U.S. history, entering the workforce.

78 million baby boomers, who Seifried said are known for frequent spending, are reaching their earning potential peaks. These same baby boomers will also be receiving inheritances from their parents, who were children of the Depression and were taught to save. That money could reach the trillions, he said.

U.S. capitalism, which causes robust spending and boosts the economy.

Foreign investments, of which America will get the lion's share. Seifried predicted that 27 percent of the world's foreign investors will chose to build and relocate businesses in the United States.

Seifried, who lost a former student assistant in the attacks, said he believes the recession ended in December, when leading economic indicators began their resurgence.

He also predicted that stocks will begin to rise and that the Dow Jones industrial average, a benchmark to gauge the state of the market, will hit 15,000 in the next three to five years and will hit 25,000 within the next 10 years. It is currently above 10,000.

'double-dip' fear

But not all of Seifried's talk was optimistic. He cautioned that a "double-dip recession" was possible. That's when a second recession takes place almost immediately following slight growth after an initial recession.

He said that will depend on oil prices in the Middle East. If they continue to climb, it could be a setback for economic recovery. He said for each $10 increase in a barrel of oil, the gross domestic product falls three-tenths of a percent. The GDP is the sum of all goods and services produced nationally.

"It's a possibility," he said. "But barring that, and any other unforeseen things, recovery should be strong over the next year."

Jim Limbaugh, president of First National Bank, said that Seifried presented sometimes complicated information in a succinct and understandable way.

"I learned that there is absolutely a reason to be optimistic," Limbaugh said. "But I think I also learned that we're going to have to be a little more wary and cognitive of what's going on around us."

Dr. Gerald McDougall, dean of the business school at Southeast, said that he was interested in learning how key the oil prices are.

"That's what we need to watch," he said. "The situation in the Middle East should be on all of our minds."

smoyers@semissourian.com

335-6611, extension 137