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Bank officials discuss economic outlook

1/29/2014

By MATTHEW KENWRIGHT

mkenwright@dailynews.net

Forty-five members of the business community attended the Economic Outlook 2014 session Tuesday at Smoky Hill Country Club sponsored by Commerce Trust Co.

Perry N. "Nick" Burroughs, Wichita, vice president and portfolio manager for the company, shared a presentation about the volatile financial markets, household debt falling and the uptick in the housing market.

Burroughs also fielded questions from the audience.

The job market has not fully recovered since the recession, and new full-time jobs are not being created as often as as part-time positions, he said. Growth after the recession has been below-average by historical standards.

"When you look at just the new job creation, there have been a lot more part-time jobs created than there have been in the past, and I think that's one of the reasons we haven't seen growth be quite as strong as we'd like to see," Burroughs said.

Burroughs said the economy is expected to grow 3 percent this year, but estimates vary. U.S. stocks had a return of 32 percent in 2013, but U.S. bonds decreased 2 percent.

"We think stocks could definitely post positive returns again, so we like stocks better than bonds," he said. "I'm not as enthusiastic about stocks from a valuation standpoint as I was last year. ... I still like them relative to bonds."

It remains to be seen what effect the Affordable Care Act and a possible minimum-wage increase will have on the economy.

"Over the last several years, as consumer optimism has moved up and business optimism has moved up, one area that hasn't was small business sentiment," he said. "It's just now starting to creep up, and a lot of the surveys we've seen have suggested that the health care act has a lot to do with that -- just the uncertainty surrounding it."

Core inflation is not a problem, he said, but it does not account for food or energy costs.

Deron O'Connor, market president of Commerce Bank in Hays, said the program sought to help people grasp what the bank foresees for the future of the economy in 2014. Many people have money in savings rather than in the stock market, and there is concern about when the interest rate will increase.

"A lot of people work their whole lives to accumulate wealth and, of course, try to capitalize on more wealth to pass on to their kids. So this is just kind of our way to help personify what we think will transpire in 2014," O'Connor said.