Area business professionals met Tuesday morning in Jim Thorpe for the 11th annual Economic Outlook. The presentation covered the topic “Will economic growth slow in 2019-20? Is a recession possible?”

Dr. Edmond Seifried, professor emeritus of economics and business at Lafayette University and chief economist for the Sheshunoff CEO Affiliation Programs, served as the featured speaker.

The economy has been doing well. The gross domestic product for the 2018 calendar year was one of the highest in years. Unemployment is at its lowest rate in 50 years, and inflation remains low.

Seifried said that as of October, the economy entered its 124th straight month (totaling 10 years) of expansion, which broke the record. And now housing starts are increasing. In August, there were 1.6 million houses started, the highest since 2008.

“I’m not ready to declare housing back, but I’m very encouraged,” he said.

So what’s causing the recession rumors?

Seifried said the composite index has predicted every recession since World War II. The index is a large mixture of securities, equities and indexes that gauge market performance.

“As long as the index is rising, then no recession,” he said. The index has fell every month for the last three consecutive months.

Seifried also looks at the ISM (Institute of Supply Management) Manufacturing Index to get a glimpse into the financial future.

Also known as the Purchasing Manager’s Index, the index surveys hundreds of manufacturing firms and monitors month-to-month changes in production.

The PMI was at its highest in 2017 at 59.7%, but has dropped from 56.6% in January to 47.8% in September. The odds of a recession at the current PMI level is 30%, Seifried said.

But he reassured the crowd that there is never a recession if the number is over 43.2%. As the percentage drops, the likelihood of a recession increases.

Another indicator Seifried likes to monitor is the difference between the 10-year Treasury Constant Maturity Rate and the 3-Month Treasury Bill.

If the 10-year Treasury CMT is less than the 3-Month Treasury Bill, then there is an inverted yield curve. Basically, this means that the yield on a short-term investment is higher than on a long-term investment.

“Inverted yield curves are cancerous to bankers,” Seifried said. Although this one might be benign, he added.

Currently, the market is at a negative 0.16%. As the difference grows in the negative direction, the chance for a recession becomes greater.

“Normally, I would be screaming to you, “We’re going to have a recession in 2020,” Seifried said, but he sees other positive markers. Namely, the rates for new housing construction are up.

Seifried said the Reserve isn’t forecasting a recession and neither are the apps GDPNow and Nowcast that he follows.

“No recession,” Seifried said, “but slower growth on the horizon.”

The summit was held at Dean Anthony’s Restaurant in Jim Thorpe and made possible by Mauch Chunk Trust Co. in Jim Thorpe, the Carbon Chamber and Economic Development, Tamaqua Area Chamber of Commerce, and PPL Electric Utilities Corp.