Steady, Moderate Growth Ahead, Economist Tells Automation Alley Crowd
TROY (WWJ) - Expect steady, if unspectacular, growth in the American economy through 2018, according to a J.P. Morgan Chase economist at an Automation Alley event Thursday.
But the 2007-09 recession did so much damage that the economy remains well behind the number of jobs it needs to get back to anywhere near what economists consider full employment, according to Jim Glassman, managing director and chief economist at J.P. Morgan Chase in New York City.
"We're still only halfway out of the recession right now," Glassman told the "Global Economic and Industry Outlook for 2014 and Beyond" conference at Automation Alley. "So nobody's jumping up and down right now because there's still a lot of damage out there."
Glassman said the economy really would need to generate seven million jobs right this second to get back to where it was pre-recession.
But things are looking up. Glassman told the audience of about 100 people that current economic data tells him "there's real momentum here, the economy is in getting-back-on-our-feet mode."
And industrial states like Michigan are the brightest stars in this recovery, with "the lights coming back on in manufacturing." Part of the reason, Glassman said, is a weaker dollar and cheap shale oil and gas making U.S. goods much more competitive, as well as the rising cost of Chinese-made goods. Increasingly, he said, United States companies want to be overseas not for cheap labor -- but for developing customer bases.
Glassman also said that today's falling federal deficits are "totally irrelevant. It's a reflection of the economy. When the economy stumbles, the deficit goes up. Now that the economy is recovering, it's going down very quickly. For economists, that's not a surprise, that's what is supposed to happen."
Glassman said that deficits help economies and nations survive through recessions, and that recent austerity measures by some European countries did more harm than good. He said the government provided little real stimulus during the recession during the recession due to political pressures, and the housing sector has been a major drag on the economy.
The real threat to American fiscal stability, Glassman said, is long-term health care spending by the federal government -- finding a politically feasible, economically sensible way to bend the cost curve of health care downward.
The event also featured presentations on rising exports from the U.S. to the rest of the world -- especially exports of manufactured goods.
Elena Stegemann, director of international business at Ann Arbor-based NuStep Inc., said her company makes exercise equipment with special features for thedisabled. It's grown from 50 to nearly 100 employees since starting to export five years ago, and is now selling in Japan, Canada and China -- 2,000 units of exercise equipment to the latter this year.
Similarly, Yannick Greiner, director of international sales at Owosso-based Rugged Liner Inc., said his truck bed liner company has grown from 80 employees to 120 in the past four years since concentrating on exports, many to the Middle East.
There's no particular magic to getting into exporting, they said -- it involves attending international trade shows and networking, along with assistance from the U.S. Commerce Department and the Michigan Economic Development Corp.
Attendees also got information on those programs from Richard Corson, director of the East Michigan U.S. Export Assistance Center of the U.S. Commercial Service of the Commerce Department; Jeanne D. Broad, international trade development manager for the MEDC; and Daniel Raubinger, director of defense and manufacturing programs at Automation Alley. Most of these programs involve market research, introductions and matchmaking. The MEDC also offers grants to assist companies in paying for initial export activities, Broad said.