Tuesday, November 1, 2011
The U.S. economy isn't as bad off as it was at the height of the recent recession, but it hasn't provided much joy to those seeking jobs or those affected by the housing slump, a pair of experts said at the annual University of West Georgia Economic Forecast Breakfast today.
William "Joey" Smith, a UWG economist, said that while there are positive signs, most people won't feel like the economy is healthy until the unemployment rate goes down. When that happens, we're also likely to see an upturn in the housing sector, a major gauge of economic strength.
"Job growth is needed for housing to rebound, and so far, we haven't seen enough people going back to work," he said.
Smith said that if you look at building permits and foreclosures in the region, there aren't many bright spots, as new construction continues at a tepid pace and the foreclosure rate remains a concern.
However, Smith said there are sources of optimism, including the healthcare industry, which continues to grow in the region, and manufacturing, which has shown signs of life.
"Greenway Medical, which is a healthcare-related business, has grown steadily recently," Smith said. He also cited Kia Motors Manufacturing Georgia, which has a large plant in West Point, and Honda Lock in the automotive industry contributing to regional growth.
"There's been a decline in the government workforce," Smith said, but that has been partially offset by some growth in private-sector jobs.
The economy has been on the mend for quite some time, but it doesn't seem like it to most people, said Roger Tutterow, an economist with Mercer University.
"Two years into this recovery and we're still well below what we normally associate with healthy growth," he said.
Tutterow said that the growth we've seen has been confined to a few areas and hasn't been sustained enough to put a real dent in the unemployment figure.
"Manufacturing and healthcare were the sectors that helped pull us out of the downturn," he said. "But demand is not strong enough to support the growth we need to have a large volume of job creation. Payrolls aren't growing at a rate that we associate with a healthy economy."
Despite that, Tutterow thinks that in all likelihood, economic growth will continue, as opposed to things getting worse again.
"My read on the economy is that we can sustain a 2.5 percent rate of growth and we avoid a recession," he said. But if a few strong negative factors emerge, such as substantial inflation, especially in energy costs, there could be a "1 in 3 chance of recession in 2012," Tutterow predicted.
But even with continued modest growth, job creation will be a drawn-out process, he said.
"It will be at the earliest 2014 before non-farm payrolls are back to where they were in 2007," Tutterow said.