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Economic Forecast Challenged by Uncertain Times

By Brendan O'Hallarn

Economic forecasting is challenging at any time, given the range of factors that can impact regional or national economic indicators.

Creating this year's regional and national economic forecasts was especially difficult for economists in Old Dominion University's Strome College of Business because of the imminent change in the presidency.

Five days before the ODU economists present their national and regional forecasts Jan. 25 at the Norfolk Waterside Marriott, Donald Trump will be sworn in as America's 45th president. Given an array of key decisions on issues such as tax reform and military spending, predicting what will actually happen after Jan. 20 is difficult.

"Economic markets do not like uncertainty. Uncertainty is what we've got," said Vinod Agarwal, professor of economics and director of the University's Economic Forecasting Project.

The presentation by Agarwal and Larry "Chip" Filer, associate professor and chair of the Department of Economics, will occur from 12 to 2 p.m. Filer will deliver the national forecast, followed by Agarwal's regional forecast, predicting such key indicators as mortgage rates, tourism revenues and unemployment.

The event is sponsored by Chartway Federal Credit Union and hosted by the Economics Club of Hampton Roads. Online registration for the event is at: https://2017economicoutlook.eventbrite.com.

Trump has said he will undertake comprehensive tax reform to increase America's economic competitiveness. He also has advocated a large infrastructure program to update roads, bridges and other transportation facilities. In addition, Trump campaigned on significantly increasing the size of the U.S. military.

Predicting which of these initiatives will proceed, and in what form, makes this forecast a challenge, Agarwal said. And the stakes are high for Hampton Roads, particularly in the area of defense spending.

Each pledge will add significantly to the deficit if not offset by spending cuts. This, in turn, will affect interest and mortgage rates. The U.S. Federal Reserve, Agarwal said, is "watching all of these actions closely."

However, the economy may not respond immediately. "For this year, we are predicting status quo. Any effects are not likely to be felt until the last quarter of 2017, if not in 2018," Agarwal said.

For information about economic forecasting at Old Dominion University, visit the Economic Forecasting Project website.

The Economics Club of Hampton Roads, which is sponsoring the event, is an organization for business and government executives and community leaders who share an interest in the practical implications of economic principles, trends and events. It was established in 1991 as a community service by then-ODU President James V. Koch and is administered by Jeff Tanner, dean of the Strome College of Business, under the supervision of an elected board.

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