Chris Chapman called the meeting to order at 1 pm. Judge Mike Robinson gave the invocation. Tom Koontz served as Sergeant at Arms. Introductions of seven guests in attendance followed by the Pledge of Allegiance
Chris reminded everyone that June 6 was the 73rd anniversary of the invasion of D-Day.
He announced the Family of Rotary game at BB&T Ballpark on June 24th at 6 pm; let Ginny know if you plan to attend. Also announced was that the new officers for District 7690 will be installed at a brief ceremony before the game. If the club can get two more sustaining members sustaining members for Rotary International, the club will set a record for the number of sustaining members (92).
The meeting speaker was Dr. Harry Davis, Finance Professor at Appalachian State University. Dr. Davis was introduced by his nephew, James Conley. Dr. Davis received his bachelor’s degree in economics from UNC-Chapel Hill, a master’s degree from Vanderbilt University and a PhD from the University of Georgia. As a North Carolina Banker’s Association economist, he puts together quarterly newsletters. He is frequently interviewed throughout the year by newspapers, radio and television for stories on the economy and banking. He is married to Lisa Davis and has one daughter and one granddaughter.
Dr. Davis said the economy we are presently in, is in a recovery mode. The present recovery is about 8 years old and it has become the 3rd longest economic expansion in the history of this country. We will probably make it into next year, when it will become the 2nd longest period of economic growth in history. GDP growth of the economy is slow by historic standards, at only 1.7 in 2016. We have relatively strong job growth, but productivity is low. Businesses have not been investing in plants and equipment. We have become more of a service economy and a service economy sees lower productivity growth. Dr. Davis said one of the reasons of the decline in productivity is that so many people are retiring, and taking knowledge and experience with them. They are replaced by younger workers with plenty of energy, but they do not have the knowledge and experience. We need to use tax incentives in order for people to stay in the workforce and to raise the social security retirement age.
Dr. Davis stated that one of the problems with the economy is slow growth in consumer spending and salary and wages. Seventy percent of the economy is consumer spending. Right now the average growth is about 2.5%. We really need a growth of 3% in order to have a robust of growth in the economy. If you look at the trend of consumer confidence it’s the highest level in history. Business confidence is the highest it’s been in history.
There are some good things about the economy:
- Interest rates are historically low.
- Home prices have risen around 6%. Annual existing home sales are around 5.6 million, and eight-year high.
- Inventory of unsold homes is at historic lows.
- New home starts are up, but we still aren’t building enough. More than 75% of millennials rent and over 50% of millennials live with their parents.
- Unemployment rate dropped to 4.3% in April, the lowest in 15 years.
- NC job growth over the last several years has been above 2%, while the national average has been below 2%.
According to Dr. Davis we need regulatory reform changes. We need to build infrastructure, and everyone knows it, but we don’t do it. We need immigration reform that allows illegals to become legal so they pay taxes and buy houses. We also need to lower the corporate tax rate to become more competitive in the world. US corporations have $2.5T overseas that they will not repatriate because they don’t want to pay the taxes.
Dr. Davis said we should not pay attention to the Federal Reserve. The Fed does not lead the markets, it follows the market. We should look at 10-year bond rates instead; rising bond rates indicate a belief that the economy is going to improve.
Dr. Davis is optimistic about the economy and believes it will grow about 2.5% next year.
Dr. Davis took several questions from the audience and the meeting was adjourned.