Economists share predictions, concerns at N.S. Chamber forum

DANVERS – A strong recovery in the housing market along with record pent-up demand for automobiles and durable goods should extend the bull market on Wall Street for a sixth consecutive year for only the second time in history, a panel of leading economists agreed Thursday during a breakfast forum at the annual North Shore Chamber of Commerce Business Exposition at Doubletree by Hilton in Danvers.But panelists also pointed to large and lingering challenges in Washington that pose a serious threat to the economic recovery.Rob Lutts, principal of Cabot Wealth Management, who moderated the forum, said growth areas for investors in 2014 include alternative energy led by solar power, LED lighting, biotechnology and healthcare information.Lutts went into detail about investment opportunities in solar energy, an industry he said nearly collapsed between 2007-2012 when it saw a 95 percent decline globally.?As a result of this blow-up in the industry, the cost for solar installation has declined 50 percent over the last five years, and that has made solar economics very appealing.”Lutts predicted 15 percent growth in solar energy production over the next 15 years, and “over the next 10 years all large-scale building built in this country will have solar (panels) on the roof or around the windows or potentially on the walls.?Walmart, CVS and many of the large box companies have big rollout programs for installing solar, and because of that there is a very high return on investment.”He suggested the TAN Fund (Guggenheim Solar) as one for investors to consider.Lutts said he?s also bullish on biotech, specifically DNA sequencing that has led to breakthroughs in predictive medicine, diagnostics and therapeutics.?The wealth created in the next 10 to 20 years (in biotech) will exceed all of the wealth created in the pharmaceutical industry,” he said.Suggesting PBE (PowerShares Dynamic Biotech & Genome) as one stock to consider, he offered some cautionary words about biotech.?These are very high performing funds. They?re going to have corrections – that means pull backs from where they are now. The best time to put a lot of money into it is after one of those, but I think it?s a high growth area,” Lutts said.Michael Tyler, chief investment officer of Eastern Bank Wealth Management, said an encouraging sign with the economy today is that “now instead of government pushing us forward, what we?re seeing is the U.S. economy being pulled by private-sector spending.”Yet Tyler spent much of his presentation warning about government spending, artificial unemployment figures and low business and consumer confidence.Though government spending as a percentage of the overall economy has seen little change, he said the allocation of government spending – with a surge in entitlement programs – “is a long-term really big deal that the government must figure out.”Tyler said rising entitlement spending has led to a reduction in government discretionary funding that includes the military.?We used to spend 6 percent on defense. Now we?re down to 4 percent and on our way to 2? percent,” Tyler said. “It?s very hard to be the world?s policemen or to have an effective military presence to protect our economic interests and our personal liberties around the world when were using 2? of our economy when we used to use 6 percent.”Another challenge, Tyler said, is consumer confidence.Citing a recent report from Associate Industries of Massachusetts, he said, “Ever since deep recession hit, confidence really hasn?t come back. That?s partly because job grown has been slow and partly because government really hasn?t been able to get out of the way enough.”What?s more, Tyler said, the shrinking labor force points to artificially low employment figures.?What?s troublesome is that after 27 weeks of unemployment, you?re no longer considered unemployed – you?re considered no longer part of the workforce,” he said. “There are a lot more people looking for work (than statistics su