Jun. 03

Top U.S. Professor Shares Insights on U.S. Economy and Business

A select group of executives gathered at BMI for a lecture and discussion on the workings and outlook of the U.S. economy as “an opportunity worth $18 trillion”. The session was led by Tulane University’s Freeman Business SchoolStrategy professor John Trapani.
The U.S. is very much a service-based economy driven by optimistic consumers, who have kept on spending more and more despite two recessions over the past 15 years. That means private investment is the key to growth, and promoting such investment has been the focus for central bank and government policymakers.
“The challenges for the U.S. economy are not very different than for any economy: sustaining growth through technologies and product innovation, sensible monetary and fiscal policies, and good political leadership,” he said. “Things are OK now. We don’t have the growth rates we’d like to have, but we do have low unemployment and very low interest rates.”
Growth of U.S. gross domestic product is forecast to accelerate to about 3 percent this year and next and then slow a bit. That modest growth outlook plus low unemployment and low inflation have made the U.S. central bank hesitant to raise interest rates. Trade and government deficits, while large in absolute numbers, are generally reasonable and sustainable, according to Prof. Trapani.
Even if America’s biggest trade partners are China, Canada and Mexico, business relations with Europe are of particular importance, as evidenced by U.S. foreign direct investments in the EU.
“Europe and the U.S. have this common bond where we know each other and trust each other. Europeans understand the US economy much more than anyone else, and they have the money to buy things.” Still, he noted, many U.S. businesses are skeptical about the potential for a free trade agreement with the EU, based on less than ideal experiences from other past U.S. trade agreements.

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