The U.S. may have entered a new age of austerity, but fears of a double-dip recession are unwarranted, according to a Sept. 16 presentation by Mark Schniepp, director of the Goleta-based California Economic Forecast.
“It’s not unusual for the economy to pause at this point,” Schniepp said, adding that the U.S. has been in recovery for the past year and will likely continue its upward momentum.
Although it is lethargic, there is a sustainable rebound in place, Schniepp said.
Consumers remain cautious but are gradually pulling out their pocketbooks again. Residential real estate investment — already at record lows — “can only go up from here.” State and local government spending is likely to decline slightly, but will be offset by increased federal government spending. U.S. exports will likely see an uptick again as the European debt crisis blows by.
And industrial production and corporate profits are rising at staggering levels. “This is one of the best indicators of future hiring,” Schniepp said.
Widely reported statistics on a summer job decline — one of the main drivers of double-dip fears — are misleading, since they did not account for the loss of temporary census jobs, Schniepp said.
But don’t expect the economy locally or nationwide to come roaring back. Recovery will likely be tempered by business uncertainty about the expiration of tax cuts and continued volatility in the stock markets. The housing market remains fragile, with surprisingly weak home sales in July.
Although there’s no double-dip on the horizon, “GDP is not rising fast enough to mop up unemployment,” Schniepp told the audience at the conference in Santa Barbara , which was hosted by Radius Group, a Santa Barbara-based commercial real estate firm.
The fate of Santa Barbara County, with its 9.2 percent unemployment rate, depends on the pace of the nationwide recovery, Schniepp said. The county’s labor markets have stabilized and non-farm layoffs have diminished, but state and local public-sector layoffs this year and next will keep the unemployment rate elevated even as private-sector hiring accelerates, he said.