The economic outlook for 2015 is upbeat. What might derail it? North Carolina State University economist Mike Walden weighs in.
“That’s always a good question, and economists are certainly not immune to being blindsided in our forecasts. Many of us missed the Great Recession and financial implosion. This year, in looking at what could go wrong, most economists’ eyes are focused on foreign situations, and they are really in two categories.
“One of those foreign situations (is that) in which conflict is going on, and we worry about what that conflict would do if it spreads or if it reduces world confidence. And, of course the two biggest conflicts right now in terms of active conflicts are one in Eastern Europe between Ukraine and the separatists and, of course, Russia, as we think has been involved. And, secondly, obviously always in the Middle East, the resurgence of militant groups who are taking over cities, et cetera, et cetera. So we worry certainly about that, and we could have some situation – I’m not predicting this – where in the Middle East, some large oil refinery was blown up in Saudi Arabia. That could send tremors throughout the world.
“The other area that we’re worried about is in terms of general economic growth. And, really, if we look at four regions of the world – … the U.S., China, Japan and Europe – really, the U.S. is the only economy that is growing robustly. All the other three have seen dramatic reductions in economic growth. There’s a further concern in China about whether they may be susceptible to a real-estate implosion. So we have to keep our eye on those other three major players in the world economy and what their level of economic growth is. And if, for example, all three of those go into an economic recession, that could have big negative implications for the U.S. economy. “