Wells Fargo Bank chief investment strategist James Paulsen said Wednesday that he expects the national economy to remain strong in 2006.
Corporate profits are "exploding," the stock market is up65 percentage points over March 2003, unemployment has dropped to 5 percent and the country is witnessing 3.5 percent to 4 percent gross domestic product growth, he told 250 people attending a Wells Fargo sponsored luncheon in Fargo.
"Net worth is higher than it's ever been before," he said, more jobs are available and retail sales are strong.
"I don't see a lot of evidence of a lot of weakness," Paulsen said.
Nonetheless, consumer confidence remains low, he said, blaming mainstream media for creating public uneasiness regarding the economy.
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Consumers are expressing caution and fear that the U.S. economy could slip to where it was following the 2000 dot.com bust, he said.
"I can't figure out why. When I look at the statistical data for this economy it's pretty damn good," Paulsen said. "I think there's a heck of a negative sort of pessimistic attitude out there today in general that's being fed on by the media."
Current oil prices and interest rate hikes are not affecting the economy as negatively as some people think, he said.
The Federal Reserve Bank has raised interest rates 11 times since 2004 and they are still lower than they were several years ago, Paulsen said.
"The oil crisis is not anywhere close to the killer crisis we had in the 1970s," he said.
Paulsen said he expects oil prices to drop over the next couple of years.
Foreign trade appears to be improving, he said, with signs of strengthening within the European and Japanese economies.
"These views that China is going to take over the world are way overblown," he said.
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Locally, agriculture continues to be a "stabilizing force" for the Red River Valley economy, he said.
The Midwest is trying to move away from dependence on manufacturing toward servicing the high-technology sector, he said.
"That brings in greater stability than we used to have," he said.
For two months in a row Fargo has held the lowest unemployment rate in the nation, said Brian Walters, president of the Greater Fargo Moorhead Economic Development Corp.
"I think it's a good sign that economic conditions today are very healthy," he said. "We're performing very well."
Readers can reach Forum Business Editor Craig McEwen at (701) 241-5502
