Economist is Bullish on Biodiesel and Mixed on Recovery

Two years ago, at this conference, Economist Don Reynolds predicted unemployment would go over 10 percent and that housing would decline by 25 percent. This year, he said our “new normal” business environment will include higher inflation, higher interest rates, lower consumer spending and a declining American dollar. He noted that the United States is no longer the economic power in the world.  In 2000, the U.S. accounted for 28 percent of global economic output. Today, it accounts for just 20 percent, about the same as China, India and Brazil combined.

On the positive side, he noted that we’re close to reaching a bottom in the residential real estate market, that banks are raising their own capital and that inflation is near zero. These things make Reynolds bullish for the short term. “The recovery is coming and I’m looking for upside surprises like greater than 2 percent real economic growth,” he said.

His optimism is countered in the long term by the huge burden of our twin deficits—the federal budget deficit and the U.S. trade deficit. Those make Reynolds more nervous about the economy’s performance three to five years out. “That’s when we’ll see inflation and higher interest rates,” he said.

Overall, Reynolds said he is very positive about biodiesel’s outlook.  “Biodiesel can help reduce our trade deficit and improve the economic well being of Americans,” he said.  “Other positives for biodiesel are that it benefits the environment, the economy and improves national security.”