Ohio's economy may continue to lag next year, but the national picture will be respectable, a bank economist said in Toledo yesterday.
"I'm very upbeat about 2006," said Richard DeKaser, chief economist at National City Corp. in Cleveland.
The U.S. gross domestic product, which is the sum of all goods and services, should hit 3.7 percent next year after ending this year at 3.6 percent, he said.
The Federal Reserve's efforts to keep inflation in check and a brighter employment outlook should put the nation's economy closer to what economists call the "Goldilocks scenario - not too hot, not too cold, but just right," Mr. DeKaser told a gathering at The Pinnacle in Maumee.
Separately, James Coons, an economist with J.W. Coons Advisors LLC in Columbus, told The Blade he is less optimistic than other economists.
"My expectation is for slower growth and by that, I mean, slower than the consensus, and if I'm wrong I think it'll be even slower than I'm predicting," he said. He forecasts GDP growth of 3.3 percent, mainly because of higher energy prices.
"We could also see a cooling off in housing next year and that could have ripple effect through other sectors like furniture," he added.
Mr. DeKaser predicted unemployment next year will dip just below 5 percent, a figure he said constitutes full employment.
Ohio, however, is a mixed story, he said. The state has been on a good track but is coming from a weaker position. The last downturn four years ago cost Ohio 2 percent of its jobs, which the state has not recovered, he said.
The state is caught in the transition of the manufacturing sector, which has a high number of jobs at wages that can't be maintained in a global economy, he said. Job growth has occurred since 1999, but the state lags others.
One variable, the two economists said, is the impact of the recent hurricanes.
The storms will hurt, Mr. Coons said. "My sense is that higher energy costs are going to exact more of a toll than most people are looking for. The Fed will just keep raising interest rates until it feels good about things."
Mr. DeKaser said higher energy prices appear to be taking a 2 percent chunk out of normal consumer spending levels. But, he added, if no further problems develop, oil prices should be flat next year and natural gas prices should decline.
"If I'm right the worst is behind us," he said.
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