PHOENIX, AZ—At theLodging Conference in Phoenix, BernardBaumohl, the chief economistat the Economic Outlook Group, gave an economic update that got right to thepoint, immediately addressing the most talked about issue in theglobal economy: China.

“Are we going to see a drag in global economic growth and willit affect the US economy,” he asked. The answer to the former,“Yes, how could it not,” he said, noting that China contributed 25%to global GDP growth last year. He expects China's slowdown toshave 3% from the global GDP. However, he said, this would notaffect the US economy, which is still poised for 2.5% economicgrowth over the next two years. While that isn't huge growthprospects, he said, “The US is the bright spot in the globaleconomy. We don't see typical stress points that foreshadow arecession.” We have several good years ahead of us.”

China's economy is at its peak, according to Baumohl, who saysthe hybrid socialist and capitalist economy has reached its maximumpotential. While some members of the economy say that growth equalsstability, others say that the country must move forward withreforms to move from a manufacturing economy to a consumer economy,which would involve a rough transitionary period with shutteringcompanies and high unemployment. Baumohl expects the performers toprevail, but says that it may lead to some “social unrest.”