The 20th annual such breakfast sponsored by the Bank of North Georgia featured, as usual, economist Albert W. Niemi Jr., dean of the Edwin L. Cox School of Business at Southern Methodist University in Dallas. And his forecast was as gloomy as the skies outside that morning.
“The news is not great,” he said. “It is unprecedented how sluggish this recovery has been.”
Niemi projects that growth in the country’s Gross Domestic Product will slip from 2 to 1.9 percent next year. That’s far below the 4 percent where it should be at this point of the recovery, based on historical trends.
And though he thinks the unemployment rate will edge down from the 8 percent area where it is now, he added that the true unemployment rate, accounting for the unemployed who have stopped seeking work, is just under 15 percent. So much for Obama’s so-called “stimulus” program.
Moreover, joblessness will grow if Obama and Democrats in Congress succeed in ending the “Bush tax cuts.” Doing so would be “a job killer” and would “hammer the middle class,” Niemi warned.
“The biggest thing holding this economy back is uncertainty,” Niemi added.
Businesses are uncertain which tax rates might change and by how much, making it difficult to plan. And the sweeping Obamacare health law, which will not be fully implemented until 2014 and beyond, isn’t doing anything to help, he noted.
“A lot of businesses are holding back until they know the costs,” said the former University of Georgia professor.
He offered a faint ray of optimism, saying most of what growth the country will see in the next few years will come in Sun Belt states like Georgia and that the metro Atlanta area has the advantages of accessibility and quality of life.
Niemi pointed out that the United States’ economic position has eroded due to the shift in our economy from manufacturing toward hospitality. And he said that Georgia was one of the states most affected by that change.
“No state in the nation’s manufacturing was more tied to the residential housing market than Georgia,” he said.
And although new housing starts are finally ticking back upward, the overall number of homes being built is far, far below the level seen every year in this country between 1945 and the start of the recession.
Niemi’s warning should come as a warning to those who keep pushing for higher taxes and increased government spending as ways out of the economic morass. They didn’t work for FDR in the 1930s and they won’t work now, either. The better approach is to cut taxes, downsize government and end the uncertainty that has sidelined so much of this country’s business and industry.