After digesting fellow seer Steven Slifer’s straightforward talk, Joey Von Nessen said he, too, would not mince words in his remarks to real estate agents.
Slifer’s outlook was “optimistic,” and “I’m not going to disagree with Steve’s assessment,” Von Nessen said.
“That’s only a bad thing if you want to see two economists duke it out today,” Von Nessen quipped, bringing laughs from the standing-room-only crowd of 400 at Charleston Plaza Hotel.
Moments earlier, Slifer, a financial consultant with NumberNomics and former chief economist at Lehman Brothers, said, “I think it’s going to be a pretty exciting year.”
The economists shared their forecasts for 2015 on Jan. 14 at the “Residential Real Estate Market Update” and “2014 Year in Review” event hosted by the Charleston Trident Association of Realtors.
A Daniel Island resident, Slifer predicted the gross domestic product should grow by 3.4 percent — up from 2.8 percent last year — mortgage interest rates should stay near record lows, and gas prices will likely rise during the peak driving season before falling steadily as they did in 2014.
Focusing on South Carolina, including the Charleston area, University of South Carolina economist Von Nessen proclaimed, “If you like 2014, you’re really going to like 2015.”
The buoyant reports come after years of mixed news and downbeat forecasts as the national housing market sank in 2008-10, the economy fell into a recession and signs of a rebound failed to fully materialize.
The real estate business began picking up speed in 2013, and the overall economy has gradually bounced back as employment has grown.
Slifer, who keyed on the larger economies, said the U.S. fiscal outlook shows productive expansion for the next few years at least. He said no factors for a recession will materialize until 2018.
A burgeoning stock market and plummeting fuel prices, down to $2 a gallon from $3.70 a year ago, have bolstered consumer confidence, he said. Home prices are rising at 4.5 percent a year, boosting equity. At the same time, mortgage rates fell to a 3.9 percent average in 2014.
“My gosh, that’s the lowest in 50 years,” Slifer said. He predicted rates will inch upward to 4.5 percent by the end of the year.
The U.S. economy has also been “cranking out jobs,” pushing close to what’s considered full employment.
“I’m looking for 3 percent growth in consumer spending,” Slifer added.
Slifer also cited a “big drop in the homeownership rate.” Much of the decline, he claimed, stems from the 35 and under generation.
“Younger people are not as desirous to own a home,” he said. While fewer homes are being bought, “there’s a huge shortage of apartments,” he added.
One cloud marring the upbeat employment numbers involved estimates of “discouraged workers” who have dropped out of the labor force. “Workers don’t have the skills. The solution is education,” Slifer said. Even so, the jobless rate should drop to 4.9 percent by the end of the year.
The expert also highlighted the nation’s shrinking trade gap, decreasing in part due to technological advancements such as fracking that have “transformed the oil industry,” he said. “By the end of the decade, the U.S. will be a net exporter of oil,” Slifer said.
He predicted a “wild ride” of volatility in 2015 as the Federal Reserve’s open market committee raises short-term interest rates for the first time in eight years.
Later, Von Nessen predicted a “stable but shifting” economy in South Carolina. Areas such as the Upstate around BMW and the Lowcountry with Boeing are seeing the highest employment increases in recent years. Just like BMW and the automotive industry, Boeing is contributing to an “emerging aerospace cluster,” he said. Unlike individual plants leaving states, “clusters don’t get up and move,” Von Nessen said.
In the past year, however, employment gains have been most pronounced in the tourism-driven Myrtle Beach area. “Consumer spending is up. Household health is the best in five years. When home prices go up, net income goes up,” he said.
There are signs of a fundamental employment shift as the professional and business services sector reap the largest job gains.
“The growth is primarily temporary staffing, employment staffing, contract workers,” the economist said.
Von Nessen said he thinks “this is a long term trend,” noting that the sector’s contribution to employment growth rose 30 percent in 2013-14.
“Employees say, ‘This works. We’ll stick to this,’” Von Nessen said.
He predicted a 1.9 percent economic growth rate in the state, pointing out there’s a “general uncertainty” tied to economic troubles in global markets. Also, no South Carolina industry is in rapid expansion, considered an 8-10 percent growth rate.
The economist said housing growth in the state is “really leveling out. That’s a good thing. You want stability,” he said.
Looking at the Charleston housing market, he forecast prices will increase at a slower rate. The 25 percent housing surge in metro Charleston in 2013 dropped to 9 percent last year. Von Nessen predicted a 6 percent increase in 2015, calling it “good news.”
Reach Jim Parker at 937-5542 or firstname.lastname@example.org.