Bill Greiner, the man BusinessWeek magazine calls the "sage of Kansas City," expects 2011 to be a year of economic growth.
But the chief investment officer of UMB Financial Corp.' s Scout Investments told several hundred UMB clients and business people at the Hyatt Regency Wichita on Tuesday morning that he expects inflation to increase and the unemployment rate to remain high.
Greiner said he expects the 2011 real gross domestic product to fall somewhere between 2.9 percent and 3.5 percent.
The high end of his GDP forecast would mean "reasonable job growth," he said.
Real GDP in 2010 was 2.9 percent, up from negative 2.6 percent in 2009.
Greiner said he thinks this year's GDP will be primarily driven by a 10 percent increase in capital spending by businesses.
"Corporations' balance sheets are extremely liquid," he said. "That's probably going to be a significant catalyst for growth."
With continued growth comes the likelihood of rising inflation.
"We think inflationary pressure is truly starting to build," Greiner said, adding that he expects annualized consumer price index inflation to be somewhere between 1.5 and 2 percent by the end of the year.
Unemployment will remain high, ending the year at 9 percent, Greiner said.
Greiner also expects in 2011:
* Consumption expenditures will be between 2.6 and 3.1 percent.
* The federal funds rate — the rate at which banks sell and buy funds at the wholesale level — will end the year between 0.2 and 0.5 percent. It currently is 0.12 percent.
* Housing starts will total 100,000. The total would be skewed toward multifamily units because of rising default and foreclosure rates, Greiner said, since "those people, when they get kicked out of their houses, need someplace to live."