At NJ Bankers’ forum, experts say reform helps economy

By Meg Fry
Somerset | Jan 30, 2018 at 11:09 am
From our print edition

The trillion-dollar question of the day was this: Is the economy as great right now as everyone says?

Presenters at the New Jersey Bankers Association’s 7th Annual Economic Leadership Forum, held recently at The Palace at Somerset Park, had mixed feelings.

“We are on solid, stable footing,” Lindsey Piegza, chief economist and managing director at Stifel Financial Corp. in Chicago, said as she presented her economic research to the audience. “We are not talking about an overly robust recovery or an overly aggressive economy, but a stable one.”

Geoffrey S. Greener, chief risk officer at Bank of America, agreed.

“We think the U.S. economy will probably grow around 2.75 percent in 2018, with a global economy about a percentage point stronger than that and year-over-year consumer spending up between 5 and 6 percent,” he said. “But markets are a pretty unforgiving place. If you can figure out what you’re missing, you have a fighting change of staying a step ahead, but if you get complacent, the markets will make you pay.”

Wilbur L. Ross Jr., the current U.S. secretary of commerce and former chairman or lead director of more than 100 companies operating in more than 20 different countries, said he believes that, due to increased regulatory reform, the economy will continue to improve.

“There were more than 4,000 regulations that we’ve either canceled or delayed the implementation of, all of which impose great cost on business, interfere with decision making and are a big drain on the economy,” he said.

Ross spoke via video conference due to unexpectedly needing to be in Washington, D.C., in anticipation of the government shutdown. His words, however, resonated with the audience.

(READ MORE from ROI-NJ on the economic forum.)

“The reason why executive and consumer confidence has gotten so strong under the (President Donald) Trump administration is that everybody is conscious that this regulatory burden has been lifted,” he said.

More than 500 guests attended the event — a record, according to John E. McWeeney Jr., CEO and president of NJ Bankers, and Robert H. Doherty, New Jersey state president of Bank of America.

“As the biggest bank in New Jersey, we’ve got a unique perspective on the economy, because we are doing business at Bank of America with more than one out of two households in New Jersey and more than one out of three commercial entities,” Doherty said. “We believe that gatherings like this economic forum are important to ensure that we are all educated on where the state stands on important issues to help our leaders develop policies that will propel us forward.

In agreement

It is not every day that you hear a banker express gratitude for increased regulations.

But Geoffrey S. Greener, chief risk officer at Bank of America, recently did just that at the New Jersey Bankers Association’s 7th Annual Economic Leadership Forum.

“I think, in the financial industry, we are undeniably in a much stronger position than we once were,” Greener said. “We’re on very solid footing, and I think we must give the regulators in our country tremendous credit for moving as quickly and boldly as they did to ensure our financial system was strong.

“Risk has been reduced from what it was before the (financial) crisis.”

The economic report

Lindsey Piegza, chief economist and managing director at Stifel Financial Corp. in Chicago, recently presented her economic research to an audience of more than 500 at the New Jersey Bankers Association’s 7th Annual Economic Leadership Forum.

Here were her findings:

  • While still extremely low for the marketplace, the Federal Reserve will slowly move along a gradual pathway to higher rates: “That’s exactly what we saw at the end of last year, the Fed stealing the show, as we wrapped up 2017 raising the federal funds rate for the third time in a year.”
  • The Federal Reserve is working to decrease the highest level of debt the U.S. has ever seen relative to the size of the economy: “But the vast majority of assets on the Fed’s balance sheet are backed by liabilities that the Fed has no intention of reducing. So, the most we can expect the Fed to wind down the balance sheet is to a level of $3 trillion.”
  • There has been above-trending gross domestic product as of late: “But, as we await fourth quarter numbers in 2017, we are still talking about a 2.5 percent growth rate. Positive, but nothing to write home about. Remember, 2 percent is the bare minimum that we should expect from a developed, recovering economy — in fact, putting it into historical perspective, we can see that a 2.2 percent growth, which is the average pace that we’ve seen post-recession, is the slowest pace of recovery that we’ve seen in Post-World War II history.”
  • The Federal Reserve said the labor market will continue to see positive growth: “But these one-off, better-than-expected reports have done nothing to arrest the clear downward trend in momentum. We are still putting Americans back to work on a month-to-month basis, absolutely, but back in 2015, we were heading jobs at a pace of around 250,000 month-to-month. That slowed to 230,000, then to 200,000 — we’re now down to less than 170,000. Still positive, but as you will notice, we are losing momentum.”
  • Inflation has remained under 2 percent for 21 of the past 25 years: “The Fed has forecasted 2 percent inflation ‘next year’ for the better part of the last decade and yet we continue to see metrics moving further away from that target.”