Some financial analysts are forecasting doom and gloom for the 2020 market. But don’t count United States Rep. Barry Loudermilk, a Republican from Cassville who represents Georgia’s 11th congressional district on Capitol Hill, among those with a pessimistic attitude about the election year economy.
“There’s been a lot of talk about the inverted rate curve, but that is just one of the many factors that is looked at,” Loudermilk said at a Bartow County Republican Party event held Saturday in Cartersville. “We’re in a different day and age, too, when the stock market, interest rates, they’re very volatile … a lot of that is because we started using interest rates as a way to avert a recession.”
To safeguard the economy from another downturn, Loudermilk said he advocated the raising of interest rates.
“When’s the last time you made any money on a savings account or a C.D.?” he said.
Meanwhile, Loudermilk said other market indicators — such as job growth, average wages and consumer confidence — suggest the roaring economy will continue to make positive strides in 2020.
In fact, Loudermilk said his confidence in the current economy is so high, he doesn’t think there will be recession in the United States for at least another two years.
“When you look at Standard and Poor's and you look at some of the stock market indicators, a lot of these are Fortune 500 companies, who not only have a U.S. presence, but they have a global presence,” he said. “So when they start looking at a recession in Europe, or a slowdown in the economy, that affects their stock prices. But when you look at the mom and pop shops here, the small and medium U.S. businesses, they’re strong and they’re continuing to grow stronger.”
Nor did Loudermilk say he had any immediate concerns about potential “bubble bursts” on the horizon — although there is one particular sector of the economy that does give him some anxiety.
“The only concern I have is the lack of start-up homes in certain areas of the nation,” he said. “Even here in Bartow County, we’ve had a concern about that. I met with Toyo Tire here, and this is in the midst of all the trade negotiations … I ask them what their No. 1 issue was and they said ‘lack of housing for their employees.’”
From his perspective, Loudermilk said it appears that real estate owners are waiting for prices to peak before selling the properties to developers.
“I’d like to see some of them go ahead and start moving it and developing it now,” he said. “It makes money for them, it provides homes and housing for those that are being hired right now.”
On both an international and domestic level, Loudermilk said the ongoing "trade wars" with China certainly creates an air of economic uncertainty. For many companies, he said the most palpable impact has been the realignment of material sourcing.
“When you look at some of the businesses we have here, they buy some raw material from China, that may be in question of being tariffed,” he said. “The Chinese have a history of taking advantage of those types of situations … I’ve met with some businesses here where they buy parts from China that are subject to a tariff, and so they go and they buy from another country — China will actually take that part they were buying and add another piece to it where they can ship it as a complete product and avoid the tariffs and undercut the American-made business.”
Loudermilk predicted continuous growth throughout the year ahead, at roughly the same rate.
“Some of that is going to be suppressed a little bit by the trade negotiations, the uncertainty there, but now is the time to be doing that,” he said. “If it wasn’t for the negotiations, you’d probably even see a greater increase in the economy.”
Loudermilk briefly touched upon a Congressional Budget Office report issued last week, which anticipated the upcoming federal budget containing a deficit upward of $1 trillion.
“You’re going to see that deficit grow, because Democrats being in control of the House, is going to be negotiating with the Senate on where the dollars are,” he said. “We’ve already seen through their proposed budgets coming forward that they’re cutting military spending and they’re increasing domestic spending — the exact opposite of what we’ve been doing.”
Pending sustained economic growth, Loudermilk said there’s an outside chance some of that spending may be reined in.
“If we can get on a trajectory of reducing federal spending [and] empowering the state governments because they can actually do more, more efficiently,” he said, “that can help us get on a trajectory of fiscal responsibility as well.”
On the local level, Loudermilk said he’s optimistic about Bartow County’s economy heading into the new decade. However, he re-emphasized the importance of available housing as a factor — and sustainer — of those favorable economic conditions.
“You look at the growth on the north end with the distribution centers, Chick-fil-A choosing Bartow County, all of these are going to bring in some jobs, people from the outside to come in and take those jobs,” he said. “We have to have a place for them, and most of those, the salaries they’re going to be making, will be looking to buy a home. It’s just a lack of those affordable starter homes could be the only thing that would have a slowdown potential on the economy … maybe hold us back from some of the potential growth we have. So that’s something I think the leaders can look at, and need to look at.”