By Maria Saporta
For the first time in several years, national economist Allen Sinai is thrilled to be able to share an uplifting view of the economy.
Sinai was the keynote breakfast speaker at Wednesday’s Capital Connection, a networking conference put on by the Atlanta chapter of the Association for Corporate Growth at the Cobb Galleria.
“We are on the right side of the business cycle,” Sinai told the audience of about 350 people. “The message to you is a positive one. It will get brighter in terms of business opportunities.”
Sinai said this is the “best part of the business cycle,” when a recovery is just beginning to take off. He predicted that for the next couple of years, “there will be more upside surprises than downside surprises.”
A few of the reasons for Sinai’s optimism. Consumers are beginning to spend again, but not necessarily on the big ticket items like cars and new homes. Baby boomers are being more restrained because they are preparing for their retirement years.
Sinai expect the gross domestic product will grow by 3 to 4 percent this year, which is a bit less than what typically happens in the early stages of a recovery.
Unemployment will continue to be high, but it will decline. Sinai said he expects unemployment to be around 8 to 8.25 percent at the end of this year and to drop to 7.5 percent range in 2012.
Meanwhile, companies and corporations are sitting on a great deal of cash. There has been a trend to invest in technology rather than labor, which has not helped the job picture.
But for those who are employed, their spending will increase, which should help fuel the economy.
“This world as we see it, it’s probably a time to be more aggressive with what you’re doing rather than hiding out,” Sinai said, adding that it’s a good time to make some deals.
But Sinai also brought up some concerns. “The No. 1 worry that we have is the sovereign debt of the United States,” said Sinai, who did applaud President Barack Obama’s move toward the center.
The national debt shows the “incredible irresponsibility” in Washington, D.C. “The parameters of our sovereign debt is almost as bad as Greece.” Sinai said.
Later, in response to a question about gold, Sinai asked rhetorically: “Do I really want to hold U.S. Treasury bonds? No.” He went on to say that U.S. Treasury bonds are almost like “junk” bonds. But investing in the EuroZone or Japan isn’t much better.
Instead, safer bets would be to invest in the economies of Canada, Australia, Singapore, South Korea and even China.
But Sinai said the best bet might be to invest in emerging companies in the United States, the exact sweet spot for Capital Connection, where 92 private equity firms participated in a marketplace Wednesday. Private equity leaders were available to listening from attendees about opportunities to invest in companies.