KABA and Chase host economic forum with Dr. Anthony Chan, Senior Economist for JP Morgan Asset Management.
November 11, 2005

The economy will continue to grow in 2006, but at a slightly slower pace than in 2005. That was the prognosis from Dr. Anthony Chan as he addressed members of the Kenosha Area Business Alliance and Chase clients Thursday morning at the Kenosha Country Club. More than 100 attendees were on hand in what has become an annual event for Chase and KABA.

Dr. Chan was fairly optimistic about the economy, but noted that we are in the later stages of expansion, with slower growth and increased vulnerability. Dr. Chan noted that energy prices should stabilize in 2006 and that the Federal Reserve has kept inflation in check – both positives. He noted that we should expect to see consumer spending and the housing market slow, but he did not express major concern about the so-called “housing bubble.” He explained that individual incomes have not risen as fast as average home prices and that this would lead to a gradual correction.

Dr. Chan did express concern over the Federal Government’s budget deficits, which he predicted could hit $1 Trillion within the next seven years unless policy makers get their fiscal house in order. Additionally, he noted that some of the recent major bankruptcy filings at companies like Delphi are indicative of the pressure manufacturing companies are facing to be globally competitive. He called this a “painful reality,” in pointing out that Delphi was paying roughly $60 per hour per worker in wages and benefits compared to $1.10 per hour for similar output in China.