Now that the political season is behind us, economists can plug in a known factor now into their equations. What does their crystal ball tell us now, will forecasts change? Mike Switzer interviews Bruce Yandle, Dean Emeritus at the College of Business & Behavioral Science and Alumni Professor of Economics Emeritus, both at Clemson University. He is also a Distinguished Adjunct Scholar at George Mason University’s Mercatus Center which publishes his Economic Situation Report.
TRANSCRIPT:
Switzer: Hello and welcome to another edition of the South Carolina Business Review. This is Mike Switzer. Now that the political season is behind us, economists can plug in a known factor now into their equations. So what does that equate to? Will forecasts change? Bruce Yandel is dean emeritus at the College of Business and Behavioral Science and alumni professor of economics emeritus both at Clemson University. He is also a distinguished adjunct scholar at George Mason University's Mercatus center, which publishes his Economic Situation Report. And we have him on the phone. Bruce, welcome back to the program.
Yandel: Delighted to be with you, Mike.
Switzer: So tell us, I guess the, question on everybody's mind, will this election change what our forecasts are for the economy?
Yandel: I think we have to realize that we're talking about a mighty big aircraft carrier and it doesn't change directions very quickly. There will be efforts to do and undo things, but I think it's safe to say that the economy for the next 12 months, the cookies are already in the oven. But I think there will be some attention given to some key areas, particularly health care, petroleum, war in Iran and so forth. But I doubt that that attention will lead to real changes that we will notice in the next 12 months. It'll take longer than that for it to show up in things like real GDP growth.
Switzer: Well, speaking of GDP, we've had some decent numbers coming in there. Is this, ah, something that is coming from a certain sector of the economy? I'm just going to go ahead and say the words data centers. Are they pushing this economy?
Yandel: You better believe it. that GDP growth number for the third quarter, the first estimate came in a few days ago. A really nice number, 3.4%. That's the highest number in a year. And it was driven largely by two things. One, investment in data centers and two, consumer spending. But the driver. Data centers, Mike, and we got a lot of them in South Carolina.
Switzer: Yes. That hasn't escaped us, has it? You mentioned inflation. So is this going to push, interest rates higher? Not much happened at the last Fed meeting.
Yandel: That's right. I think if one wants to place a bet, you would bet that the Fed will nudge up interest rates the next time they meet the inflation news that accompanied that good GDP growth number that we just talked about. We got the annual rate of growth of inflation for the economy at 3.6. It is accelerating, not decelerating. So energy prices are still rising. But one that doesn't get a lot of conversation. The share that people pay for their health care insurance, which is the cost, is shared with an employer. The average increase across the nation running at 9% as the shift from employers to employees in terms of health care. So they're still climbing.
Switzer: And how about the situation more locally here in South Carolina? It seems like every time we talk, you're pretty rosy on our state's forecasts.
Yandel: I wish I could put the rosiest possible tone in my voice, Mike, but there's a report that you and I talk about frequently that is turned out by the Federal Reserve bank of Philadelphia. And anyone who is a report junkie the way I am, you can go to the Federal Reserve bank of Philadelphia website and take a look at the state coincident index chart. It's a map of the 50 states. South Carolina is the second strongest state in the nation. Nevada is number one in terms of coincident indicator growth. Very healthy. We've been in that position for a while. And so relative to our neighbors, we are doing very well. But incidentally, this map, the entire map looks a whole lot prettier now than it has in recent months. And so the nation's economy is looking brighter and healthier, Mike. And, so there's a lot to feel good about out there.
Switzer: Well, Bruce, as always, thank you so much for your time and your insight.
Yandel: Glad to talk with you. Take care, man.
Switzer: Bruce Yandel, one of our resident economists, joins us courtesy of Clemson University and George Mason University's Mercato center, which publishes his Economic Situation Report. And we will have a link to that posted at our webpage so you can learn more. South Carolina Public Radio, where you can hear this show again. And remember, you can hear us wherever you find podcasts with the South Carolina Business Review. This is Mike Switzer.
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