Economist Kent Gardner serenaded 200 attendees last week at the Dutchess County Regional Chamber of Commerce monthly contact breakfast with lyrics and voice to make a Broadway show audience cheer. Those looking for a magical chorus of an economic “Everything”™s splendid” will have to wait.
“There has been good news, but it”™s not economic spring yet,” Gardner said (he did not sing everything). “It still feels a bit like February, maybe early March.”
Gardner cited recent declines in the national unemployment figures as positive, but tempered that news with the fact it will take 15 years at the current job-replacement rate to employ the 14 million Americans now out of work. “That”™s double the 2007 number and it does not count the 9 million who are underemployed, who have a part-time job, but would like to work full time,” he said. “We need to see not just buds, but some lush growth. This economy badly needs lush growth.”
Gardner is a doctor of economics and president of the Rochester- and Albany-based Center for Governmental Research. He confessed to practicing “the dismal science” and said “economists make bad forecasters,” but he told the assembled several macroeconomic forces critical to the world”™s prosperity are now in play:
”¢ “The global liquidity crisis,” wherein easy credit and government bailouts fuel inflation. Inflation”™s dark underbelly is that loans taken out during an inflationary cycle hurt the borrower more than the lender “who is held harmless for the inflation.”
Ӣ The worldӪs debt is more intertwined than ever. Gardner cited Italy and Spain as potentially undermining the Euro because, should those economies founder, they are far larger than the three often now mentioned as being on the ropes: Portugal, Ireland and Greece.
”¢ The rise of Asian power and influence. Gardner sang: “Once I built a hedge fund and now it”™s gone ”“ buddy can you spare a yuan?”
”¢ The current situation in Japan, which Gardner called, “startling, chilling and disturbing. There have only been three earthquakes that powerful globally since 1900.”
”¢ And again using the “dismal science” shield to address issues as if from a spreadsheet: “Despotism is better for oil production than democracy. Democracy is a messy process.”
“We really have to deleverage,” Gardner said, explaining that savings needed to rise and spending fall.
He said the national recession was led by the housing and finance industries.
Finance has bounced back. But housing remains a millstone on the economy, notably for an underpublicized reason: “Historically, mobility has been an American economic strength. We have always gone where the jobs are. But when you can”™t sell your house, it”™s difficult to move on.”
In Dutchess County between 2007-10, home sales declined 20 percent ”“ a percentage point better than the state average ”“ and prices declined 18 percent, with Gardner noting wild swings within price statistics that even saw some upstate communities gaining in home value over the last three years.
Gardner called the Marcellus shale that contains natural gas and which underpins New York”™s Southern Tier “a wonderful resource. We need to figure a way to get it out of the ground safely.” He equally heaped scorn on corn-based ethanol, which currently gobbles one-third of all U.S. corn with dubious energy payback. “I think you have the Iowa caucuses to thank for that. And that”™s not a laugh line.”
Several chamber members ”“ including President and CEO Charlie North and emcee Denise Doring Van Buren of Central Hudson ”“ urged participation in the chamber”™s June 20 “Day of Golf” to benefit college scholarships with the asterisk to “act now, space is limited.”
