The economic outlook both nationally and locally is for modest, but steady growth, according to Scott Wren, an economics expert for Wells Fargo Advisers, based in St. Louis, Missouri.
Wren, who spoke to a crowd of about 125 people at a luncheon hosted by the Pasco Economic Development Council, used two phrases to sum up the forecast for the near future: “good but not great” and “modest growth.”
The luncheon on Jan. 29 concluded Business Development Week and was at the Tampa Bay Golf & Country Club in San Antonio.
Its theme was Equity Strategy Outlook for 2015.
Wren is more bullish than bearish about the 2015 stock market, but global events including the financial outlooks in China and Europe will affect the United States economy broadly, as well as the local level, Wren said.
At home, Congress needs to be more business-friendly, he said.
“I want you to go away optimistic,” Wren told his audience. “I don’t want you to be wildly optimistic.”
Among hopeful signs are modest but steady economic growth of about 3 percent for 2015 and probably for another two years, Wren said.
But Wren cautioned: “Don’t get fooled into thinking we’re going to accelerate. They are truly in a dream world if they think they can get the economy to grow by 5 percent and consistently grow by 5 percent.”
At least for the next couple of years, Wren also expects inflation to remain low and wages to climb only modestly. “People aren’t gaining a lot of buying power,” he said. “I don’t expect that to change anytime soon.”
Even so, consumer confidence is at an all-time high and that, he said, means people are more willing to spend on discretionary items such as furniture and automobiles, or take a cruise.
Business confidence also is increasing and companies are more willing to make purchases that had been put off during the recession, such as technology upgrades.
Trey Starkey, chief executive officer of Starkey Ranch, offered this reaction to Wren’s assessment.
“I think he’s spot on. It’s the way it feels for the real estate end and ag (agriculture) end too,” Starkey said.
Modest but steady growth is much better than the extremes that came with the real estate boom and the economic downturn that followed, Starkey added.
“The slow modest growth model is a lot more sustainable. It will be in place for a long time,” Starkey said.
The number of houses that can be built annually has fallen, but the volume is no longer at the lowest end either, Starkey said. “You’re not going to hit it out of the park in one year,” he added. “But you don’t have the end of the world either.”
In the Tampa Bay area, including Pasco, there are signs that the modest growth described by Wren is taking hold, particularly among larger companies with $25 million to hundreds of millions of annual revenues, said Skip Miller, senior vice president and commercial relationship manager for SunTrust Bank.
“They are reinvesting in themselves, acquiring businesses and buying equipment,” he said. “They’re really seeing a nice impact.”
Small businesses have not rebounded as much, but prospects are improving.
Strip malls that once had 70 percent of storefronts vacant now may have only 30 percent vacancy, Miller said.
“There’s still a way to go, but the last two quarters have shown a pickup on the small business side,” he said. “Confidence is coming back.”
Johnny Wild of Wild Real Estate Investments in Lutz and George Esparza of W & S Auto Center in Zephyrhills agreed that small businesses are doing better. But they want to see fewer business regulations and a banking community more open to lending money to small businesses.
Wild described himself as “conservatively positive.”
Tom and Deni Nihra moved their company, J.T.D. Enterprises, from Michigan to the Wesley Chapel Compark 75 nearly two years ago. The company manufactures tubular assemblies used in products such as golf ball retrievers and flagpoles. Their products also are applicable with defense technologies.
Before relocating, the couple considered sites in Pinellas, Hillsborough and Volusia counties. They also met with Pasco County officials and staff members of the Pasco Economic Development Council.
“By far, they were the group that was the most organized, the most welcoming,” he said. “They went out of their way to help us get information to make a decision.”
Tom Nihra, company vice president, liked Wren’s view that defense spending is likely to go up no matter who resides in the White House in 2016.
The news on consumer spending also is good news.
“That gives me a reason for feeling more optimistic,” he said.
Published February 4, 2015