Leading Regional Economist Sees Business Growth Ahead

"Companies are sitting on a lot of capital. I expect the business community is going to pick up," said Dr. Bernard Weinstein, director of the Center for Economic Development and Research and professor at the University of North Texas. He was the featured speaker at yesterday's meeting of the DFW Apartment and Investment Brokers, a monthly networking breakfast held at Prestonwood Country Club in North Dallas. Weinstein, as is usually the case with his keynote appearances, packed the room.

Weinstein's reading was based on standard economic indicators, but the decline in the productivity level in last year's final quarter shows businesses "have squeezed so much" that it's finally time to hire, expand and buy new equipment. He said corporate capital has been bankrolling stock buybacks, helping shareholders but doing nothing for productivity levels so a change in direction would have a positive trickledown effect on the business sector.

Taking all perspectives into account, Weinstein said "2006 will be an OK year, but not a record year." And, of course, the caveat is a national or global occurrence could upset the cart.

Weinstein's Top 10 list of worries includes Iraq, the federal deficit and unfunded pension liabilities. Not to be ignored is Americans' savings habit, which research shows was nil last year for the first time since the Great Depression. "The rest of the world is saving," he said, "and they're investing in the US, both to buy our debt and our companies." Also of paramount concern is the strain that retiring Baby Boomers will put on Social Security and Medicare, which are up against predictions of insolvency in 2041 and 2020, respectively.

The bird's eye view of Texas is that it's in line with the rest of the US with regard to economic indicators instead of marching to its own drummer as it did in the 1980s. For 15 consecutive years, Dallas/Fort Worth led the nation in population growth and was second in job growth. There's no indication that North Texas is going to slip dramatically, according to Weinstein's assessment.

With all eyes on the Federal Reserve, Weinstein predicts a few more bumps will come this year in the short-term interest rate--holding true to retired chairman Alan Greenspan's "measured pace" strategy. As those in business are keenly aware, the Fed's new head, Ben Bernanke, pushed it to 4.75% this week. "I think the Fed is concerned about inflation," the local economist said. "Inflation is rising higher than it was a month or two ago."