Investment officials from UMB said Wednesday they expect moderate economic growth in 2013.
KC Mathews, executive vice president and chief investment officer at Kansas City, Mo.-based UMB, told a group of Wichita business executives he expects gross domestic product growth this year of between 2 and 2.5 percent.
“The bottom line is the fundamentals of economy are moving,” Mathews said, though it’s at a pace that’s slower than most people would like.
Mathews was one of three UMB investment officials speaking at its annual Economic Roadshow at the Hyatt Regency Wichita. Joining him were George Hersh, senior vice president and portfolio manager, and Eric Kelley, senior vice president and managing director of fixed income.
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Mathews said expectations for moderate growth are based on a stable to improving employment landscape, more housing starts, improving consumer confidence and stable manufacturing.
He and his colleagues said, however, that national issues such as federal debt and a re-emergence of looming cuts in government programs could put a damper on economic growth.
“One to 2 percent additional spending cuts will impact GDP for the rest of the year,” Hersh said.
They warned that the growing federal deficit is a concern going forward. Baby-boomer retirements will put more pressure on the nation’s debt as they begin receiving Social Security payments. A decreasing labor force, brought about by the trend of the shrinking size of American families, will also put pressure on the nation’s future debt.
“In 1975, we had 3 percent labor growth,” Mathews said. “Today, we’re at less than 1 percent labor force growth. This slow growing labor force will have to support the very fast growing silver crowd and that will be a hindrance in our economy.”