Economist predicts a slow-growth economy
Portland, Ore. — "I'm usually very optimistic, you just caught me in the wrong decade," says a former chief economist for the state of Califonia.
In fact, Philip J. Romero, PhD, now dean of California State University's College of Business and Economics, delivered a sobering message about the economy and its recovery over the next few years to 150 attendees representing practice, industry and academia at the annual Pet Healthcare Industry Summit, sponsored by Banfield, The Pet Hospital.
Romero's predictions? Americans can expect continued slow growth for the economy. While Romero doesn't believe the economy will sink into another double-dip recession, he refers to it as a kind of "zombie-like" performance.While the economy is slowly recoverying, it has been the longest recession since World War II.
"I believe the government stimulus failed," Romero says. In fact, the stiumulus didn't snap this country out of recession, it just lessened the pain.
Softness in the world economy, possible reversal of tax cuts, new taxes, lack of job creation by the private sector and increasing number of long-term unemployed ultimately adds more stress to a stressed-out economy.
"You will not have a sustainable recovery unless you have substantial increases in employment by the private sector," Romero adds.
While he believes the stock market "will be an attractive place to invest in the next couple of years," increasing government debt will place new burdens on taxpayers. He believes the economy will be ripe for stag-flation (high inflation and high unemployment rates).
"In this recession, employers cut jobs much faster than they cut in previous recessions. The number of people seeking unemployment is no longer dropping. And we have seen a huge increase in the long-term unemployed. This creates a substantial structural problem. If any of you have been out of the workforce for any period of time, your skills atrophy. The longer you are out, the higher the probability you will ever get back into it again."
Ultimately, Romero predicts it will take four to five years for unemployment to turn around.
Consumer confidence is always a huge variable, and this recession has taught consumers to start saving again.But to right itself, the economy needs a sustainable turn in consumer confidence and that spurs new spending.