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Layoffs. High unemployment. Decreasing home values. Pretty much paints the picture of our current economy.
Actually, that was the picture econmist Steve Rick painted three years ago. Since 2008, Rick has shared his economic philosophy at Lancaster County’s economic forums, which were sponsored by Founders Federal Credit Union and the Lancaster County Chamber of Commece.
At the initial forum, Rick, an economist for the Credit Union Association who holds degress in economics and finances, attributed the dismal economy to fewer jobs, higher inflation, rising oil prices, higher debts and the falling dollar value. At the time, the nation was plagued with $4 per gallon gas.
The major fears were “wrenching recession and a spiraling inflation.” We have to admit there was not a whole lot of optimisim shared in that first forum.
In 2009, Rick reiterated much of what he shared in 2008. But he gave just a glimmer of hope. The spiral was slowing some. Basically, it was no longer a free fall, Rick said.
While there was some encouraging economic signs, it didn’t bode well for the unemployed. He predicted that the national unemployment rate would reach 12 percent and that it would be 18 months before there would be any noticeable relief. Factors needed to turn the tide in the economic crisis included: stabilizing the banking system, implementing tighter credit standards, restoring investor confidence and restoring consumer spending.
Today’s status? Just a few weeks ago, Rick predicted home prices will continue to fall, but that the labor market was on the verge of turning around.
Again, he cited the causes of the downturn in the economy. Contributing factors include the country’s financial meltdown, the collapse of Wall Street and last year’s bank bailouts. Economists never factored these events in their predictions and projections.
Rick warned folks to be wary of “black swans,” the term given to low probability events that could hinder the nation’s economy and impact economic forecasts. A good bellwether for a resilent economy is the strength of its durable goods market. These are goods which last at least three years, such as cars or appliances.
“When the economy is bad, people stop buying these,” Rick said.
Rick predicts the U.S. economy will grow slowly and people will not spend much over the next five years. Americans will be more thrifty and try to save money. He said the labor market shows some signs of improvement, but adds that it will be five years before the national level returns to normal.
As the local job market grows so will consumer confidence and production of goods. He predicts home prices will rebound next year. While Rick did not paint a glowing picture of the economy, he has pointed to some signs of improvement.
We all have been impacted by the economic downturn. We can still cite layoffs, double-digit unemployment, decreasing home values and other factors. There have also been some jobs created recently. Red Ventures just broke ground on a second building. The unemployment rate dropped last month.
So there are signs. We hope they continue. Next year if Rick returns we hope he will be able to give a glowing report on our economy.
Until then, we’ll remain cautiously optimistic.