Economist Says Growth Will Occur, But it Will Remain Slow
Published on September 19 2012 3:19 pm
Last Updated on September 19 2012 3:25 pm
Written by Greg Sapp
An economist with the Federal Reserve Bank of St. Louis told the Effingham Noon Rotary Club Wednesday that growth in the US economy will continue, but that it will remain slow. He also said recent steps by Federal Reserve Chairman Ben Bernanke to keep interest rates artificially low could end up hurting, rather than helping the sluggish recovery.
Bill Emmons is a Vice-President as well as an economist for the Federal Reserve. Emmons is projecting the economic growth rate at 2% annually for the forseeable future. That's below the 4% growth rate typically seen, but it is about the same rate seen since the slow recovery began. Emmons said the economic cycle is taking much longer to escape this time, saying consumer spending and residential investment is not doing its job, and there are concerns about the debt load.
Emmons said his boss, Jim Bullard who is President of Federal Reserve Bank of St. Louis, is not currently a voting member of the Federal Reserve Board, but Emmons said if he had been he would have voted against the steps taken by Chairman Bernanke, fearing that it will generate inflation. Emmons said his boss would say the policies endorsed by Bernanke to give the economy a boost are "untested, risky and have consequences".
Emmons said some economists believe the damage done in the financial meltdown in 2008 was too great to allow old processes to get the economy back to previous levels. He said Bernanke believes the system can recover and that's why Bernanke took the steps he did.
Emmons discussed that if we as a nation "go over the fiscal cliff" with no agreement by year's end on spending cuts and extending tax cuts, he thinks we'll be back into a recession early in 2013.
Emmons also focused on population trends that will significantly affect what we manufacture, where we work, and what we buy. He said that nationally, those 65 or older will account for two thirds of the population growth through the year 2030 but, in Illinois, all population growth through 2030 will involve those 65 or older. He said the state's population of those 44 and younger would decrease from now through 2030.
Emmons said the information should make those younger than senior citizen status more valuable in the workforce, but it also indicates it will be a challenge to create jobs with an aging and shrinking population.
Emmons agreed with many others who've viewed Effingham County as an exception rather than the rule economically, to the county's credit.
Emmons' visit was arranged by Washington Savings Bank President and Noon Club Rotarian Claude Hudson.
(FROM LEFT, WASHINGTON SAVINGS BANK PRESIDENT CLAUDE HUDSON AND ST. LOUIS FEDREAL RESERVE BANK VICE PRESIDENT AND ECONOMIST BILL EMMONS)
(NOON ROTARY ALSO WELCOMED A NEW MEMBER, HENRY SIEMER OF SIEMER MILLING COMPANY IN TEUTOPOLIS. HE WAS INDUCTED AND SPONSORED BY NOON CLUB PRESIDENT ROSIE GIBBONS. LEFT TO RIGHT ARE ROSIE GIBBONS AND HENRY SIEMER)