2006 Economic Forecast

Storms avoid area. Skies warm and sunny early. Cooling later.

Forecasting the performance of the economy has proven only slightly less difficult than forecasting the weather. Complicating the matter is that sometimes the two phenomena intersect as they did late this summer in the Gulf of Mexico.

What most impressed Craig Hakkio, was how stable the economy proved to be in the face of weather’s volatility. If only the levees in New Orleans had been that resilient. The fact that the economy grew at a 4.1% clip in the very quarter that the hurricanes hit, in Hakkio’s perspective, “reflects the fundamental strength of the US economy.”

Hakkio is Senior Vice President and Director of Research at the Federal Reserve Bank of Kansas City and ably served as co-chair of Ingram’s 2006 Economic Forecast.

Although the final 2005 numbers were not in at the time of this year’s economic forecast assembly, the consensus of last year’s participants—“Skies Remain Fair, Sun a Little Less Intense”—seemed pretty much on target. The GDP grew on the high side of 3.5 in 2005. Unemployment dipped very nearly to 5.0. Inflation remained under control despite wild fluctuations in energy costs. Corporate profit margins registered 50-year highs. The housing market continued to grow. And the economy produced an encouraging number of new jobs.

(left to right)

Rick Smalley, Bank Midwest (Co-Chair & Host)

Michelle Sweeney, Ingram's Magazine

Craig Hakkio, Federal Reserve Bank of Kansas City (Co-Chair)

Dave Anderson, Gold Banc

Bill Greiner, UMB Bank

Ernie Goss, Creighton University

Homer Erekson, UMKC Bloch School of Business

Frank Lenk, Mid-America Regional Council

Tim Michel, Bank of America

Chuck Krider, University of Kansas

Bill Keeton, Federal Reserve Bank of Kansas City

Randell Moore, Blue Chip Economic Indicators

Michael Stellern, Rockhurst University