The recent problems in Greece, where Eurozone leaders approved in July the third support package since 2009, dominated the international news this summer and underscored a key reality: global economic challenges continue to emerge.
While the situation in Greece appears to have stabilized, that experience is only one of several global concerns. Others include: a potential economic slowdown in Europe; stock market turmoil in China; slow growth in Japan-many of the world’s largest markets show persistent signs of uncertainty.
That has many business leaders, entrepreneurs and investors searching for growth and stability. A survey of the horizon suggests the United States economy is positioned to record steady growth for the foreseeable future. Here are a few key data points that illustrate why.
U.S. Recovery Gaining Momentum, If Slowly
On June 16, the Securities Industry and Financial Markets Association (SIFMA) conducted its mid-year survey of its Economic Advisory Roundtable comprised of leading U.S. economists in Washington, D.C., on the U.S. economic outlook for the remainder of 2015 and 2016.
With interest rates expected to rise in late 2015, the panel forecast a 2.2% GDP growth rate for 2015-a bit lower than previously expected, but an improvement over the weak first quarter-before increasing to 2.8% in 2016. The experts also foresaw continued improvement in the employment picture, with the jobless rate falling below 5% by 2016.
Looking for further evidence of a brightening economic picture? Check out the mid-July publication of the Federal Reserve’s “Beige Book,” focusing on current economic conditions in the Fed’s 12 districts.
The Fed report finds growth in consumer spending across all districts in May and June, bolstered in part by low energy prices. Like the SIFMA Roundtable, the Beige Book sees indications of an improving employment picture as demand for skilled labor picks up, as the Wall Street Journal notes:
Demand for specialized workers was a consistent theme across districts. Business contacts told the Cleveland Fed that the construction industry “remains challenged by a labor shortage,” and carpenters and drywallers are “the most difficult to find,” a problem they are trying to remedy with apprenticeship and co-op programs.
The Boston Fed said openings for high-technology positions, M.B.A.s and expert analysts “are reportedly hard to fill.” The New York Fed reported “increased demand for human resource professionals to recruit new employees-particularly in the finance and legal sectors.”
While the collective indicators may not necessarily point toward rapid growth, the forecasts do suggest steady and stable growth in the foreseeable future-particularly when compared to the outlook for weak growth globally.
Optimism Among Young Entrepreneurs
But what about a broader perspective on the U.S. and world economies from the entrepreneurial side? A recent survey published by the Ernst & Young (EY) Global Center for Entrepreneurship finds a growing sense of confidence in the economy among many young business owners.
EY’s Global Job Creation and Youth Entrepreneurship Survey for 2015, published in June, offers “a striking snapshot of what the world’s leading entrepreneurs are thinking, planning and doing for the year ahead.” Based upon responses from more than 2,000 young entrepreneurs around the world, the survey report shows a decided optimism about job creation and the direction of the economy.
A sampling of the survey’s findings:
- 77% “expect to increase their total global workforce in 2015 (up one percentage point from 2014).”
- Entrepreneurs surveyed profess “greater expectations regarding their hiring in the next 12 months than do their larger counterparts.”
- 71% report “feeling optimistic about the economic direction of their domestic market,” while 66% “feel good about the economic direction of the global economy on the whole.”
Among the U.S. respondents, that sense of hope is similarly pronounced, with 70% professing confidence in the direction of the U.S. economy. And when it comes to their own career outlook, the picture looks even brighter- 87% say they’re optimistic about achieving their own aspirations.
The Upshot: U.S. Markets Remain Resilient
The U.S. recovery of the past 6 years has been reasonably steady and stable. That’s in spite of serious economic headwinds like slower productivity growth.
U.S. financial markets continue to perform as a reliable, responsive and resilient engine for allocating capital, creating investor opportunity, allowing for greater capital formation, and fostering job creation and economic growth.
With global turmoil and uncertainty remaining, it’s worth remembering that the U.S. capital markets remain the largest and most liquid in the world, providing roughly 80% of the credit financing for U.S. businesses.
And while we still hope for higher levels of growth, the current juncture is a relatively strong one from which to look to the future.