Harris CFO presents economic outlook

Understanding the elements of the global economy and the allocation of the U.S. and state dollars will help us better understand where the economy is headed, an economist told a group of chamber members Wednesday.

Jack Ablin, chief financial officer with Harris Private Bank, presented an economic outlook to more than 100 members of the business community as part of the Biz 6 Plus Chambers breakfast meeting at The Cotillion banquet hall in Palatine.

In addition to the economy, Ablin addressed the turn in public policy and investment strategy during the event titled “Reading the Mind of the Economy.”

Consumer spending was one of the first issues Ablin addressed. “You can’t look at the U.S. economy without gauging the U.S. consumer spending,” he said.

One way Ablin measures this component is analyzing retailers’ stock prices. He says he divides the stock performance of high-end retailers, including Nordstrom, Coach and Ralph Lauren, by the stock performance of low-end retailers including Walmart, Family Dollar and Dollar Tree.

Ablin believes these numbers show that the U.S. will continue in a “radical recovery” that’s charted like a square root sign in math. He believes we are in the sideways part of the math symbol.

He added however, that a small percentage of American households account for an increasing amount of retail spending. In the distribution of income, he said the top 20 percent of wealthiest households now account for nearly 50 percent of all income.

“Therefore, the incremental increase in retail spending is being driven by a smaller percentage of American households,” he said. This is why retail spending is up, but consumer confidence is still flat and has not yet rebounded.

Ablin told participants that the positive news is that banks are starting to lend again. “More banks are loosening their lending rather than tightening,” he said, adding that about 75 percent of clients are saying that business is picking up, but not enough to expand or hire.

In addressing the labor force, Ablin sees a structural imbalance, adding that potential employees don’t have the skills they need. Experts agree that the work force needs training and education, but Ablin points out “that it takes time to become educated.”

Participants at the event said they found the program useful. “I thought it was informative,” said Neil Scheufler, events manager at the Metropolis Performing Arts Centre. “It’s good to get an independent view of what the economy looks like.”

David Hill of Prospect Heights agreed. “I found it refreshingly candid,” said the high-tech industry consultant. He added that he was hoping to hear more information on the residential and commercial real estate market.