Economic outlook solid, politics grumpy
BY TERRY SAVAGE SUN-TIMES COLUMNIST Jul 14, 2006
Updated: May 3, 2013 12:14PM
Two prominent Chicago business leaders agreed Thursday the U.S. economy is poised for solid real growth this year, but a savvy Washington observer warned the political atmosphere will become even more poisonous.
The panel, moderated by Sun-Times financial columnist Terry Savage, shared their views with about 2,500 attendees at the annual economic forecast lunch of the Executives' Club of Chicago at the Chicago Hilton and Towers.
SAM ZELL, CHAIRMAN
EQUITY OFFICE PROPERTIES TRUST
"The overall economy is in very good shape. . . . [but a] blistering employment market . . . [could] lead to wage inflation. . . . Corporate spending will show a very significant increase. . . . Yes, there'll be a slow-down [in residential housing] valuations, but little or no downturn. . . . [In commercial real estate] I'm looking at single-digit returns on investment." Three overlooked stories: "the deferral of marriage," which has "enormous implications for real estate," the world "is in the middle of the greatest monetization of assets" ever as hard assets are converted to currencies, and the "extraordinarily divisive" citizenry, which apparently doesn't know "this country never looked so good from the outside inward. It's much better looking than what you see inside the pages of the New York Times.
DIANE SWONK, CHIEF ECONOMIST
"The economy doesn't feel as good as it looks" because the four-year-old economic expansion is "going through a mid-life crisis." Corporate profits are rising, inflation is under control, most state and local governments are in the black with the result "this economy looks more like the 1990s than the 1980s." But the consumer sector is "bifurcated," with 91 percent of households earnings less than $100,000 and producing half the nation's income, and 9 percent of households earning more than 100K and producing half the income. "Employment is growing, but wages for most are not keeping up with inflation. . . . [The economy] has a long way to go, but ... like a fine wine, it will grow better with age and reach all levels of society. ... Hard as it may sound to some, the best is yet to come."
ALAN MURRAY, ASSISTANT MANAGING EDITOR
WALL STREET JOURNAL
"The biggest unpredictable, the most under-appreciated story is the transition at the Federal Reserve from Alan Greenspan to Ben Bernanke." Economic and political conditions are similar to 1987, when Greenspan took over from Paul Volker, "a crisis of confidence" developed, leading to the stock market crash in October. "It's not inconceivable that would happen again. . . . Over my 25 years in Washington, there's been a steady slide in the ability to get things done, to reach across party lines to find reasonable solutions" to problems facing the nation. . . . The problems facing the U.S. "can't be solved with a partisan agenda."