Economic experts are forecasting growth in 2011, but don’t expect it to erase the pain of the last three years.
The Missouri Council on Economic Education on Feb. 8 held an economic outlook forum and panel discussion with local business leaders.
Supported by 42 charts of economic data, Missouri State University economics researcher David Mitchell predicted a slight increase in employment statewide this year.
However, the associate professor of economics and director of MSU’s bureau of economic research, said it would be five to 15 years before unemployment rates would return to 5 percent. Unemployment in Springfield – currently at 8.4 percent – remained below 5 percent for 14 years in a row 1994–2008.
“If you have a kid who is graduating from high school this year, there are the same number of jobs available now as when you dropped (him) off at preschool,” Mitchell told the 90 audience members at University Plaza Hotel.
This recession’s impact would be a lasting one, he said, pointing to the 8.6 million jobs lost nationwide between 2007 and 2010.
Between December 2006 and November 2010, only the government and health sectors increased employment in Missouri, and total nonfarm employment was down more than 135,000 jobs. Mitchell projects total nonfarm job growth of 15,000, or .57 percent, this year in Missouri.
Other forecast highlights included a 1.43 percent increase in Springfield employment; a 12.2 percent increase in mining in Missouri – Michell said this was due to recently high commodity prices; a 2.16 percent in the state’s leisure industry; and a 1.91 percent decrease in financial services revenue statewide.
“I think it was fairly optimistic,” Mitchell said of the forecast as compared to others he’s examined. “Some of the panel thought it was a bit pessimistic, but I do believe the worst is behind us.”
The panelists – SRC Holdings CEO Jack Stack, former State Treasurer Sarah Steelman, Springfield Area Chamber of Commerce President Jim Anderson, and City Utilities General Manager John Twitty – each pointed to confidence among employers as being a key to any lasting economic recovery. And each talked about the important role government can play in job creation.
Anderson said a renewed focus on jobs by President Obama was a step in the right direction.
“He has challenged businesses to hire, and businesses are ready to hire, but there is still a lack of true confidence,” Anderson said.
However, Twitty said the federal government’s focus on health care reform and cap-and-trade legislation have competed with job creation efforts.
“I don’t think anyone would argue that during the last two years we’ve had an activist president and Congress, and it’s made the uncertainty in the economy a whole bunch worse,” Twitty said. “We’ve been conflicted. I think we need to pick some problems that we’re going to deal with and put the others over here.”
Steelman said the economy works best when government gets out of the way and lets the private sector do what it does best. She said caution was necessary when considering economic models and forecasts.
“You can’t capture everything in a model,” said Steelman, who intends to run for a U.S. Senate seat in 2012. “You can’t capture optimism or worry or uncertainty.”
Stack has survived four recessions since 1980, and he’s very optimistic about a recovery this time around regardless of government efforts.
Stack said employers should be thinking about how to best position themselves during tough economic times.
“Go buy a window. If you buy a window right now, it will take six to eight weeks to get it because nobody has any inventory,” Stack said, adding that companies with inventory on hand ought to see higher sales than those retailers who are afraid they won’t be able to sell. In a separate economic outlook presentation last week by UMB Bank, investment adviser Bill Greiner projected a more stable year.
“I’m seeing 3.2 percent growth in (gross domestic product) this year,” Greiner said by telephone, before his Feb. 10 address to a private group at Hickory Hills Country Club. “The average annual growth since WWII, including recessions, is 3.3 percent, so this is going to feel something like a normal year.”
Greiner, president and chief investment officer of Scout Investments, a subsidiary of UMB Bank, agreed that uncertainty has plagued the national economy throughout the recession, but a recent GDP turnaround and the extension of Bush-era tax cuts pointed to economic growth in 2011.
He couldn’t speak specifically about Missouri employment figures, a focus of Mitchell’s presentation, but Greiner said national unemployment should drop below 9 percent by year end.
“We expect the economy to show some degree of acceleration,” said Greiner, BusinessWeek’s 2005 Stock Market Strategist of the Year and runner up in 2007. “The question right now revolves around the sustainability of that growth profile.”[[In-content Ad]]
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