Greater Lehigh Valley Chamber of Commerce Economic Outlook Brings Positive News
By Colin McEvoy on January 24, 2018
An announced crowd of 700 people attended the 2018 Greater Lehigh Valley Chamber of Commerce Economic Outlook on Jan. 23, and the news they heard was good.
Jay Bryson, a global economist with Wells Fargo, was the featured speaker at the event at Bethlehem’s ArtsQuest Center at SteelStacks, and said he expects the economic expansion to continue in the coming quarters, at a growth rate of between 2 and 3 percent in 2018.
“Looking at for the next two years, our basic view is the expansion that’s been in place now for eight years is going to continue,” Bryson said. “It still has legs to grow, and frankly, 2018 will probably be a stronger year than what 2017 was.”
However, Bryson warned that the economy gets later into the cycle, imbalances will start to go up, which can lead to the next economic recession.
“We’re not calling for a recession at this point, but keep in mind there are imbalances that are building up in the economy, and sooner or later that could happen,” he said. “We’ll see what happens next year; my message next year might be a little bit different.”
Bryson was one of several speakers at the annual Chamber Economic Outlook. Others included Nancy Dischinat, Executive Director of Workforce Board Lehigh Valley; Robert York, Publisher and Editor-in-Chief of The Morning Call; Emil Dilorio, CEO of Coordinated Health; and Tony Deutsch, Shareholder with Concannon Miller.
Bryson said the labor force is growing steadily, and he predicted the global gross domestic product (GDP) will grow near its long-run average over the next two years. He also expects the U.S. Federal Reserve to hike rates three times this year.
Productivity growth has been anemic in this cycle, Bryson said. There is less slack in the labor market today, wage inflation is slowly trending higher, and he forecasts that the dollar will trend lower compared to most currencies.
Dischinat said out of a Lehigh Valley labor force of 339,000, only 5 percent of our workforce is unemployed, whereas nationally, 4 percent is considered full employment. Of the roughly 17,000 not employed in the region, 18 percent are dislocated workers from construction, she said, and 16 percent are from retail.
Additionally, according to the latest unemployment compensation data, Dischinat said 65 percent of those unemployed in the Lehigh Valley are white, 69 percent are white, and 25 percent are between the ages 25 and 34. Sixty percent have a high school diploma, 69 percent have no dependents, and 26 percent are working part-time, she said.
“We know because these workers are in our building every day, either waiting to be called back for work or looking for a new job,” Dischinat said. “Employers, come and get them!”
Deutsch discussed the new federal tax rules, which he called is the biggest tax change in the last 30 years, and said it will affect everyone in the room, including businesses and individuals.
Individual tax rates decreased and the standard deduction increased, Deutsch said, but it’s not all good news for businesses. The Domestic Activities Production Deduction has been eliminated – which is bad news for manufacturers – and most business entertainment expenses are no longer deductible, Deutsch said.
Overall, however, there are increased tax benefits for businesses, including the new 21 percent flat tax rate for C Corporations and the new 20 percent Qualified Business Income Deduction for pass-through businesses. The latter is likely the biggest tax benefit for pass-through businesses in more than 60 years, he said.
“If you’re a small business owner or an investor in a pass-through entity, this will be a big benefit for you,” Deutsch said.
“At the end of the day, let’s remember: it takes all of us here to make a difference, to use our time, our talent, and our treasure in the mission of this chamber: to improve the economy and to improve the quality of life for this fantastic Lehigh Valley,” Palmeri said.
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