BofA economist optimistic about 2003
© St. Petersburg Times
There's a good reason I sat in the back of the small Hyatt Westshore meeting room, well hidden behind the serious dark business suits of an invitation-only klatch of upscale clients of Bank of America's private (read wealthy) bank. Earlier this week, BofA shipped in Lynn Reaser, its veteran Ph.D. economist and prognosticator, to shed some light on the murky world of stock markets, interest rates, job prospects, U.S. election implications, foreign markets and the possible effects of war with Iraq.
Armed with a PowerPoint presentation, a laser-light pointer and an authoritative voice, Reaser roared through enough financial data to make even the most confident executives squirm like they were back in Econ 101. I, for one, was not looking for any surprise question from Professor Reaser.
The upshot? Barring dramatic changes in the world (it's especially important to say such things these days), Reaser sees the U.S. economy gathering steam in 2003. The stock markets will strengthen. Interest rates will rise from their lowest levels in four decades. But deflation (a general decline in prices of goods and services) will not become a danger.
Off and on, I've interviewed Reaser for economic insights since the late 1980s. The UCLA-trained economist worked at First Interstate Bank in Los Angeles, then at Barnett Banks in Jacksonville. When NationsBank bought Barnett, and then Bank of America (and adopted the BofA name), Reaser landed in St. Louis as chief economist of Banc of America Capital Management.
After her breakfast remarks in Tampa, Reaser sat down to take a few questions:
Q: So how many of these presentations do you make in a year?
A: About 100. I'll make another one during lunch in Sarasota, then one in Naples the next day. Then I head home to St. Louis before going to Fort Collins (Colorado). I need to refresh my research to stay up on things.
Q: What feedback do you hear now from your audiences that you did not get a few years ago?
A: Individuals have a different view of financial markets. In the euphoria of the 1990s, people believed the stock market would continue to rise. People were very confident. Now there is more skepticism. But the people I talk to are not as bearish as Wall Street and big company CEOs. These clients are long-term investors and small business entrepreneurs, not day traders, and were not badly hurt by the dot-coms. You can see some hope about next year in this room.
Q: Do you get different types of feedback in different regions of the country?
A: Absolutely. There are bigger concerns about the technology sector in the Pacific Northwest and northern California. In North Carolina, where textiles are big, there's more worry about competition from imports.
Q: What are Tampa Bay's concerns?
A: This area was harder hit than most in Florida by the recession and the events of 9/11. Tourism is still down, though I was in Orlando and sense it is slowly coming back. The Tampa Bay area was outperforming the nation and Florida not long ago, but now they are closer together.
Q: In your remarks, you point to U.S. productivity as our brightest light.
A: Yes. This year should show the highest worker productivity in about 30 years. There's a recent study that shows the productivity difference between the average machine now used in manufacturing and the newest and best machine is about 40 percent. That's huge, and it will help spur capital spending.
On the morning of Sept. 11, 2001, Reaser happened to attend a meeting of economists in a Marriott hotel at the World Trade Center in lower Manhattan. When the first World Trade tower was struck by a plane, the hotel roof shook. Reaser quickly left the hotel (soon destroyed), never to return, even though her wallet and money were left behind in the Marriott safe. She managed to catch a free ferry ride across the Hudson River to safety in New Jersey.
Now, 14 months later, what most impresses Reaser about the aftermath of 9/11?
Her response is immediate: "The resilience of the U.S. economy."
NO PAIN, ALL GAIN: While the economy continues to sputter along, Tampa Bay Bucs owner Malcolm Glazer sure isn't feeling any pinch. Glazer ran family-controlled Zapata Corp. of Rochester, N.Y., which owns a stake in a fish meal business and once controlled a sausage casings company. He stepped down as chairman this spring, turning Zapata over to his kids to manage. Talk about a going-away gift. After Zapata's annual meeting, the Glazer executives decided to make Dad a consultant to the tune of $122,500.
That's $122,500 per month in a deal that runs until at least April 2006. Do the math. Each year, Glazer will receive $14.7-million. That's $58.8-million over the course of the four years. According to the formal consulting agreement with Zapata, Glazer has no minimum commitment to the firm but may be asked for his ideas "from time to time."
Nice work if you can get it. For the record, Zapata has reported a total loss of $37-million since the start of 1999. Who says there's a new sense of responsibility in corporate compensation?
KICKBACKS OUT WEST? Progress Energy, the North Carolina parent of St. Petersburg's Florida Power Corp., is busy cleaning up a mess in California. A Progress Energy subsidiary called Strategic Resource Solutions this month agreed to pay $1-million to San Francisco and its school system after former workers were implicated in an alleged kickback scheme. With the aid of a former school district official, the scheme siphoned money from the city's schools. Strategic Resource Solutions, based in Raleigh, N.C., will pay a $500,000 fine to the city and another $500,000 in restitution to the San Francisco Unified School District after pleading guilty last month to two felony counts of grand theft.
Two former employees charged in the case are salesman Thomas Marnane, 40, of Maryland and his supervisor, Gregory Gabrilson, 55, of Arizona. The Progress Energy division has a $30-million contract, now under dispute, with the school system to help cut energy costs. Stay tuned.
-- Robert Trigaux can be reached at email@example.com or (727) 893-8405.
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