Univest Economist Gary Wolfer says the economy has had six consecutive quarters of positive growth, but recovery is slow compared to previous recessions. “For example, the amount of unemployment that occurred during this last Great Recession is in excess of every postwar recession that we’ve had. This is not your standard garden variety recession. This really took a toll, specifically on workers in the construction industry. Those jobs I don’t think are coming back.”
He says he’s projecting Gross Domestic Product growth of 3.5 percent or better this year, but it’s unlikely the unemployment rate will drop below 9 percent, and the long-term jobless will need re-training. Certified Financial Planner George Toth of Chestnut Investment Advisory in Montgomery County says he agrees that long-term unemployment is a big part of the problem.
“When you have Unemployment Compensation out over two years, and you have more people retiring at 62 and more people going out on disability, I think the damage to the workforce because of this is significant. I have no clue about the efficacy of re-training because that’s a function of desire and a function of demand.”
Economist Wolfer says the economy is shifting from recovery to expansion, but it will take time.
“In fact we’re nowhere near working it off now because we’re not in a job creation phase of that recovery. I feel that right now there’s not enough credit out there. Credit is just not being created. It’s not a matter of interest rates.”
He says unemployment is still very high, and companies are not yet ready to start borrowing and hiring, so it could be another two years before the economy is back on track. Financial Planner Toth says smaller companies, with anywhere from a few employees to a few hundred, need to see some sales down the road before they start borrowing and hiring.
“Their demands for credit are a function of demands for their products and services, so if there’s no demand for credit that’s not surprising because there’s no demand for the end products of those companies that are employing people.”
Toth says companies are hiring, but only a few people here and there. He and Wolfer appeared Tuesday on a special edition of the WNPV talk program “Comment Please by Univest,” looking ahead at the economy in the New Year.