I listened to Dr. Jeff Humphreys, Director of the Selig Center
for Economic Growth at the University of Georgia's Terry College of
Business, at the TwinEngines' Business, Braves and the Bottom Line™
event July 21, 2009. He provided an economic forcast with
insights for manufacturing businesses.
Dr. Jeff Humphreys summarized his discussion with this
advise for a manufacturing business:
He believes the recovery will start in the 4th quarter of 2009, and
"now is the time to plan and act for the recovery - not a vigorous
recovery, but more of a flat, slow recovery".
Here are other highlights from Dr. Humphreys from the
discussion at our educational seminar:
- Last fall in 2008 the country was very close to the precipice
of an economic failure. 3 causes occurring at same time:
- Cedit failure
- Housing failure
- Financial crisis
- The federal government's actions helped avoid a Great
Depression 2.0, but there were other key factors:
- Social safefty nets in place that were not in place in the
1930's
- FDIC helped stall the panic
- The massive global response helped
- "Almost through all the really bad stuff." The economy will
continue to decline with the recovery in the 4th quarter, but exact
timing will depend on the improvements to the credit market
- There was a one-year income loss during this
recession.
- Because of the massive loss, the recovery will not be the
normal quick bounce back from a recession - slower and
flatter. Can't rulle out stagflation.
- Wealth destruction in the the middle class is unprecedented -
includes large home equity losses
- Job Loss Prediction:
- 280,000 in GA - 250,000 all ready
- 7,500,000 in USA
- Expect unemployment to peak just north of 11% nationwide
- These 5 Headwinds indicate recession very near end
- Credit Market thawing
- Housing activity (starts & sales) already bottomed
- Oil prices will be lower this year
- Inflation is not today's problem
- Wealth destruction ended at end of 1st Quarter '09
- Fed will take back rate custs mid 2010 so now is the time to
look at business loans
- Federal stimulus does not have much productivity dividend, so
payback of stimulus will be a drag on the recovery.
- Georgia Notes:
- Did not experiene the huge losses in housing, but did have a
supply bubble that hit prices.
- 12% price drop in houses, but short sales and foreclosures
overstate that drop
- Major sector of Manufacturing tied to housing in GA
- In 1999 there were 3.9 M jobs in GA; today there is 3.9 M jobs
in GA. Lost a decade of job growth and return to
pre-recession numbers won't happen until 2013.
- GA does enjoy stimulus from 3 areas today
- Population Growth
- Productivity Increases
- State and Federal stimulus