Steady growth forecast for 2018
The economic forecast for 2018 is optimistic, according to a recent presentation by Ryotaro Tashiro of the Federal Reserve Bank of Philadelphia.
Tashiro was the speaker at the Northeast Berks Chamber of Commerce’s Annual Economic Forecast Breakfast held at Kutztown University. The program was sponsored by Fleetwood Bank.
“According to Ryo Tashiro’s forecast, the outlook for 2018 shows optimism and steady growth, especially for service-providing sectors, and GDP growth
is expected to rise by 2 percent in 2018,” said Northeast Berks Chamber of Commerce Executive Director Lori B. Donofrio-Galley.
When asked the importance of the economic forecast presentation to small businesses in Northeast Berks, Donofrio-Galley said, “It is important for businesses to stay focused on their financial health, as they consider key economic factors and trends.”
An economic and public outreach associate in the Research Department of the Federal Reserve Bank of Philadelphia, Tashiro conducts research on current regional economic issues in the Federal Reserve’s Third District and informs external audiences on national and regional economic conditions, monetary policy, and the role of the Federal Reserve in the economy, according to a Chamber release.
Prior to joining the Federal Reserve Bank in June 2016, Tashiro was a business analyst for Bloomberg, where he conducted research on issues related to equity data quality. He has a master’s degree in economics from the University of Michigan–Ann Arbor and a bachelor’s degree in economics from Kenyon College, according to the Chamber release.
“Overall, economic activities in 2017 were slightly better than in 2016,” Tashiro told Berks-Mont Newspapers. “In Quarter 3 of 2017 (the latest available data when I spoke at that event; we have a new data point since then), the US economy grew at 3.2 percent at an annualized rate, which was the highest rate in three years. This was mainly due to continued strong growth in consumption, and solid growth in business investment. As for the forecast, according to Survey of Professional Forecasters, economists believe that the U.S. economy has reached a steady state, and expect the gross domestic product to grow at around 2 percent to 2.5 percent during 2018.”
When asked how the forecast affects small businesses, he explained that the Research department at the Philly Fed conducts monthly Business Outlook Surveys, in which they ask business owners around the district both about the current state of their businesses and their future outlook.
“The survey results show that business owners felt good about business conditions throughout 2017, and they maintain a high-level of optimism about the nearterm outlook,” he said.
Regarding unemployment and job growth, Tashiro said, “Job growth in the state and the Reading MSA remain solid, and the labor market continues to be tight. At the state level, apart from the manufacturing and information sectors, we are seeing broad-based growth in terms of year-over-year job growth, with the service sector having the largest gains. We are also seeing a possible effect on the labor market from the shift from traditional retail to ecommerce.”
Tashiro said that between November 2016 and November 2017, the retail sector lost more than 4 thousand jobs; however, the transportation and warehousing sectors gained almost 4 thousand jobs. At the regional level, he said the general pattern for Reading MSA’s labor market is very similar to that of the state – strong service sectors and a possible effect of transition to e-commerce. Unemployment rates for both the state and the area remain low, he said.
“As the labor market continues to tighten, both the hard and the soft data show that more and more employers are having difficulties filling their job openings,” Tashiro said. “This may be partially caused by a mismatch in the skills employers seek and the skills applicants offer. Thus, understanding where and how the mismatches occur is a likely key topic in 2018.”
Offering a few comments about the new tax law, Tashiro said, “As many economists have said on this topic previously, while I think the new tax law will provide a small boost on short-term growth, it will have a very limited effect on long-term growth. At the end of the day, longterm economic growth is determined by two factors – number of workers in the economy and the productivity of workers. If the new tax law can affect one or both of these, we will see a change in long-term growth.”
Tashiro hopes that chamber members gained a good understanding of the current state of the economy, especially how their regional economy is doing relative to the state’s economy.
“During the Q&A session, I received a number of excellent questions, and I hope that I was able to clarify some concerns,” he said.
The Federal Reserve Bank of Philadelphia helps formulate and implement monetary policy, supervises banks and bank and savings and loan holding companies, and provides financial services to depository institutions and the federal government, according to the Chamber release.
For more information about the Northeast Berks Chamber and upcoming events, visit www.northeastberkschamber.com.