黑料正能量

Everyone is keeping a close eye on the economy. Whether on a global scale or at the kitchen table - it's a topic that is at the top of everybody's mind these day.

Simon Medcalfe, PhD is聽 the Cree Walker Chair in the Hull College of Business at 黑料正能量 and resident expert on the economy, and he shared his thoughts on where the economy stands as the final months of the year approach.

Q: The Gross Domestic Product report was up, what should we take out of that?

鈥淭he GDP was interesting because it was actually up. The first two quarters were negative growth, so the economy had shrank. This time, the growth figure came in at 2.6%, but closer reading suggested it was actually a worse reading then the negative readings we had because consumer spending by firms was essentially flat. The growth was seen in net exports or government spending or things like. Consumers were kind of pulling back a little, which is why earnings were a little lower as well.鈥�

Q: The economy needs to slow down a little, doesn鈥檛 it?

鈥淚 mean, yes, if you鈥檙e thinking about the Fed, that鈥檚 what they are worried about right now, inflation, because the economy is so incredibly hot, particularly with regards to prices. They鈥檙e raising interest rates with the aim at slowing down the economy. Unemployment is historically very, very low, if not at record levels in different places, so we could probably sustain a little slowing of the economy without impacting the labor market too much and try to get this general inflation under control.鈥�

Q: The economy could use a little unemployment, it鈥檚 that kind of counter intuitive?

鈥淪ome unemployment is not bad. Economist use to suggest in the long run, the natural rate of unemployment is about 5-6%. Now we have unemployment in the 2-3% range in places. We have a little bit of wiggle room to see that increase.鈥�

Q: What's the difference between frictional and structural unemployment?

"Economist talk about frictional unemployment and structural unemployment. Frictional unemployment is more of a job match or job search problem. So it鈥檚 a lack of information. Structural unemployment is because of the changing nature of industry within an economy.

An example being people working in textile manufacturing and it鈥檚 hard for them to go straight into computer science coding because they don鈥檛 have the skills. This is more long term than frictional and in some cases can be quite detrimental to regions and people.鈥�

Q: The Fed is likely to raise interest rate by .75%, are there signs of this slowing down?

鈥淚 think they鈥檒l start slowing that down over time, but I think their projection is about 4.6% and we鈥檙e like 3.25% now. They鈥檙e looking at all the economic indicators. Not looking at any one or two, but everything. They鈥檙e looking at inflation, and have different measure of that. They鈥檙e look at the breakdown of inflation like how much of it is due to the war in Ukraine, and what areas of the economy it may be impacting. They鈥檙e looking at the labor market, definitely looking at manufacturing output, etc. The one thing they don鈥檛 generally look at is financial markets. They would look at the housing market though and different sectors of the real economy, not the financial economy.鈥�

Dr. Simon Medcalfe is a highly regarded economics expert in the Hull College of Business at 黑料正能量. Medcalfe is available to speak with media regarding the economy and its outlook 鈥� simply click on his icon now to arrange an interview today.