News Column

2002 Board of Economists Hispanic Economic Outlook

May 2002, HISPANIC BUSINESS Magazine

National Outlook
1. Real GDP growth is estimated at 1.1 percent for 2001; what is your estimate for 2002?
Negative to zero 0%
Very slow (0.1% to 1.0%) 20%
Slow (1.1% to 2.4%) 60%
Moderate (2.5% to 3.4%) 20%
Robust (3.5% or more) 0%
2. Recent economic data indicate that the recession has ended, yet recovery has seemed anemic. How likely is it that the economy will slip back into a recession later this year?
No chance 0%
Less than 50/50 90%
About 50/50 10%
More than 50/50 0%
3. Inflation, as measured by the Consumer Price Index, was estimated at 2.8 percent last year; what is your projection for this year?
Relatively tame or nonexistent (less than 1%) 10%
Stable (1% to 2.5%) 60%
Moderate (2.6% to 3.5%) 30%
Relatively high (3.6% or more) 0%
4. What do you expect to happen to interest rates for the rest of the year - especially the prime rate, which was 9.5 percent in January 2001 and 4.75 percent in February 2002?
Continue to fall 0%
Remain about the same 60%
Start rising 40%
5. What do you expect will happen to housing starts for the rest of the year?
Fall 20%
Remain about the same 50%
Rise 30%
2% or less 10%
2.1% to 3% 50%
3.1% to 4% 40%
4.1% or more 0%
7. Will real business investment growth (estimated at minus 3.1 percent for 2001) decrease or increase in 2002?
Decrease 5% or more 0%
Decrease less than 5% 20%
Increase less than 5% 70%
Increase 5% or more 10%
8. What is your projection for this year's corporate profits (which fell about 16 percent in 2001)?
Fall 10% or more 10%
Fall less than 10% 40%
Remain about the same 20%
Rise less than 10% 30%
Rise 10% or more 0%
9. The U.S. unemployment rate averaged 4.8 percent in 2001; what do you expect for 2002?
Improve significantly (4.4% or less) 0%
Stay about the same (4.5% to 5%) 70%
Worsen slightly (5.1% to 5.5%) 20%
Worsen substantially (more than 5.5%) 10%

Hispanic Economy Outlook
10. What is your prediction for the average Hispanic unemployment rate this year (estimated at 8.1 percent for January 2001)?
Improve significantly (7.5% or less) 0%
Stay about the same (7.6% to 8.5%) 60%
Worsen slightly (8.6% to 9.0%) 30%
Worsen substantially (more than 9.0%) 10%
11. What do you expect for Hispanic employment for the rest of this year?
Rise substantially 10%
Rise slightly 60%
Remain about the same 20%
Fall slightly 0%
Fall substantially 10%
12. How will Hispanic companies' revenues perform this year?
Rise substantially 0%
Rise slightly 60%
Remain about the same 10%
Fall slightly 30%
Fall substantially 0%
13. How will U.S.-Latin American trade perform? (It declined slightly last year, mainly because of lower imports.)
Improve significantly (up 5% or more) 10%
Improve slightly (up less than 5%) 40%
Worsen slightly (down less than 5%) 40%
Worsen significantly (down 5% or more) 10%
14. What is your projection for U.S. Hispanic population growth in 2002?
Rise substantially 30%
Rise slightly 70%
Remain the same or fall 0%
15. Will the number of Hispanic firms rise or fall this year?
Rise substantially 20%
Rise slightly 60%
Remain about the same 20%
Fall 0%

Special Questions
16. What factors arising from the September 11 tragedies will significantly hinder the Hispanic economy for the long term (two years or more)?
No long-term impact 0%
Slump in airline travel and hospitality industry 70%
Slowdown in border trade with Latin America 70%
Drop in consumer confidence 40%
Increase in government spending for military and
homeland defense
Increase in minority unemployment, especially
among Hispanics
Tighter immigration restrictions 100%
Higher insurance premiums 40%
17. What do you think would best stimulate the economy toward a stronger recovery?
Increase tax cuts 30%
Increase government spending 40%
Lower interest rates 20%
Balance U.S. budget 0%
Other: Restore confidence in the government
and politicians
18. How will the Enron scandal affect the stock market?
No long-lasting significant impact 40%
Will lower stock prices further because of lower
accounting of corporate profits
Will change permanently how earnings are
accounted for
Will extend the bear market into a crisis of confidence
for the remainder of the year

Open Questions to Board of Economists
1. What do you think is the biggest obstacle to a growing Hispanic economy?
Frank Chow: Lack of college educational opportunities resulting from changes in enrollment selection practices.
George Borjas: Changes in immigration policy in the next decade.
Isaac Cohen: Discrimination and protectionism.
Adela de la Torre: Lack of investment capital for Hispanic small businesses; high unemployment within the Hispanic labor market; relatively low high school and college graduation rates for Hispanics.
Jorge del Pinal: Slower aggregate income growth owing to increased unemployment and low-paying jobs with little stability and poor benefits.
Raul Hinojosa-Ojeda: Lack of access to capital and technical assistance.
Henry Ingle: Lack of a well-educated and skilled workforce; very low numbers of Hispanics with a college education, even in major Hispanic markets.
Bárbara Robles: Lack of access to credit; the digital divide.
Marta Tienda: Low average educational attainment, especially relative to other groups.
Tony Villamil: Scarcity of long-term capital to finance expansion of Hispanic enterprises; weak public education system.
2. What public policy changes are needed to encourage growth in Hispanic companies?
Frank Chow: Reduction in the time and paperwork needed to get SBA approval by streamlining and providing better assistance to minority entrepreneurs.
Isaac Cohen: Promotion of equal opportunity and free trade.
Adela de la Torre: Increase in [SBA] Section 8(a) program for minority businesses; federal programs that provide technical support in business financial management and planning; increased opportunities to capitalize on foreign trade and investment through regional policies such as U.S.-Mexico border industrialization programs.
Jorge del Pinal: A policy of micro-loans with minimal paperwork to stimulate small-business growth among Latinos.
Raul Hinojosa-Ojeda: Improved SBA funding and targeted programs to Latino business, particularly in international areas.
Henry Ingle: Better linkages in programs tied to education and the marketplace.
Bárbara Robles: Strong pro-Hispanic policies at the SBA; subsidies and tax credits for increased technology investment; educational subsidies for entrepreneurial training in higher education and magnet high schools.
Marta Tienda: Capital investment (loans) and incentives for business start-up and maintenance, especially in densely populated ethnic neighborhoods.
Tony Villamil: Significantly expand SBA loans and guarantee facilities; support educational reform to improve efficiency and outcome of K-12 system; create Free Trade Area of the Americas by 2005.

Source: HISPANIC BUSINESS magazine

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