Economist: Growth in 2017 could be tempered by policy changes
A new president and Republican-controlled Congress could bring economic growth next year, but that growth could be tempered by key policy changes promised by President-elect Donald Trump, economist Jeff Korzenik told suburban business executives Thursday during the Daily Herald Business Ledger Newsmakers' Forum: Business Outlook 2017,
The chief investment strategist for Fifth Third Bank in Chicago spoke to about 80 business leaders at the event held at Le Jardin-Catigny Park in Wheaton. He likened the current economic expansion to the seventh inning of a baseball game, noting "we are starting to see the signs that indicate the cycle will come to an end."
"But if Game 7 of the World Series taught us anything, there can be a long length between inning seven and the end of the game," he added.
Korzenik said there will be a renewed push for deregulation and tax changes under the new administration, which has generally been good for business and GDP growth. He said the volume of federal regulations has been pared back two times since 1936 -- once after World War II and again in the early 1980s -- and that both were followed by two decades of economic growth.
But he added that tax changes could be tied to Trump's proposed trillion-dollar infrastructure stimulus, which creates a dilemma for the federal government.
"Both parties want to do infrastructure spending. No one want to explode the deficit. So the solution is how do we use the tax code in such a way to fund this infrastructure spending?" he said.
Korzenik noted the labor market is doing well, with unemployment low. Finding people to work on infrastructure projects can be affected by the smaller pool and higher wage demand, as well the possibility of new restrictions on immigration.
The labor issue and potential changes in international trade agreements could temper the projected 4 percent annual growth rate, he noted.
Panelist James Hamilton, a partner with the Glenview accounting firm of Weiss & Company LLP, added that while the federal government might be rolling back taxes, states are looking to squeeze more taxes from businesses that might not be headquartered in that state but do business there.
"With a Republican Congress and a Republican president, that generally means more things are left to the states," he said. "That could be tough. We do know that they're aggressive, they're hungry, that they're not doing very well from a business standpoint and they will do whatever it takes to bring tax dollars to their state."
From a local standpoint, Choose DuPage President and CEO John Carpenter noted four key factors that can become economic accelerators for the county: The Argonne National Laboratory and Fermilab technology center; the western O'Hare access project, the "First mile/Last Mile" initiative to connect people to transit, and the proposed DuPage Business Center near DuPage Airport in West Chicago.
Sponsors of the Newsmakers Forum were Fifth Third Bank, Power Forward DuPage and Weiss & Co., LLP. Marketing Partners were AM 560 The Answer; Small Business Advocacy Council; Management Association, GOA Regional Business Association and MRA -- The Management Association.