Speakers positive on U.S. economy; share thoughts on election, concerns for security

Frank Kelly, founder and managing partner at Fulcrum Macro Advisors, told bankers attending the Minnesota Bankers Association annual summit June 10 that he sees an economic renaissance coming, as the world "already has changed in the last three years.".Population decline will prevent China from dominating the world economic stage, he said. In addition, the country has a tremendous youth unemployment problem, with as many as 40 percent of people ages 16-24 out of work..India, he said, is taking steps to boost its economy and it has the population growth to sustain it. Kelly said investors are pulling 90 percent of the funds they have poured into China and shifting much of it to India. Kelly reported that India has built 75 new airports in the last year and has plans for another 75 in the coming year. "India is the place to go," Kelly said. .Russia, he commented, is dying. Russia, like China, Kelly said, is suffering from a declining population. Russia, in particular, is struggling, with some 900,000 men between the ages of 18 and 40 who have fled in recent years. Kelly said he expects the war with Ukraine to last at least two more years. He said the war is taking the lives of 24,000 Russian soldiers per month. Putin, he said, wants to claim other countries for Russia, believing that the fall of the Soviet Union was one of the great tragedies of history. .The birth rate in the United States is declining, but Kelly said immigration is fueling the country's population. While people continue to flock to the United States, Kelly noted that "no one is breaking the door down to get into Russia or China.".Kelly noted that about half of the planet's population will have the opportunity to vote in national elections in 2024. He warned about the prevalence of misinformation on the internet, and the potential for other cyber tactics that could influence those elections, including the one in the United States. Nonetheless, from the perspective of the investment community, he said the consequences of either candidate winning have been figured into global economic strategies so he does not expect a significant change in the economy as a result of the election. In terms of international investment, he said the United States remains the safest place in the world to invest..Much of the funds authorized by Congress in recent years, such as the CHIPS Act of 2022, infrastructure legislation and climate infrastructure measures, have not been awarded and/or spent yet, Kelly commented. This represents a lot of money poised to stimulate the economy, Kelly said, adding that he does not expect the Federal Reserve to lower rates this year. He does not expect Congress to pass any banking legislation this year, although he said if Donald Trump wins the election, "we can expect a new group of regulators.".Charlie Cook, the famed political analyst, in a separate presentation, told bankers that President Biden has a "one in three" chance of being reelected this fall. While acknowledging his own personal preference for the current president, Cook said President Biden has pursued far left public policy, which he questioned in light of a narrow election victory in 2020. Cook said Biden has been governing as if he has a "mandate from the electorate," when in fact the country is very evenly divided on most policy issues..Paul Benda, senior vice president operational for risk and cybersecurity for the American Bankers Association, presented a challenging summary of the cyber and fraud risk landscape facing bankers. He said the incidents of fraud in the banking industry are up 50 percent in the last couple of years. The extent of fraud is difficult to quantify, he said, because so much of it goes unreported. But he noted that banks reported $260 billion in fraud in 2021 through Suspicious Activity Reports..He said ransomware continues to be a problem, although fewer victims are paying the ransom. He said four years ago, about 85 percent of victims paid, but last year only about a quarter of them paid the ransom..Romance schemes and other frauds aimed at seniors are common, Benda said. Victims become emotionally connected with scammers, who patiently work their tricks on people who are fooled by their phone calls. Benda said even when seniors are warned that they are being scammed, the vast majority will go through with instructions to turn their funds over to the unknown scammer..Benda said telephone companies should be held to some level of responsibility in the event of these kinds of scam. Often, these scams involve mis-directing caller ID and other equipment that make the scammer difficult to identify. .Benda also said checks are "an inherently insecure way" to transfer money. "I think we need to get rid of checks," he said. It is a bad idea to share a document such as a check, which contains an address, account number and routing number, Benda commented. Furthermore, he said, criminals are increasingly stealing the contents of mailboxes, which makes it more risky to send checks through the postal system..Banks will increasingly have to deal with artificial intelligence and "deep fakes" that will attempt to interfere with financial transactions, Benda said. He said there are internet tools that make it easy to create audio and video fakes that are essentially impossible to distinguish from the real thing. He demonstrated his point to the group by sharing a computer generated audio clip that sounded just like an authentic recording. He also shared a realistic computer-altered video that showed ABA President Rob Nichols singing.