Slow, steady economic growth expected to continue
SYCAMORE — The good news is that the U.S. seems to have the strongest economy in the world right now. The bad news is that the U.S. seems to have the strongest economy in the world right now.
Eliciting nervous laughter from his audience, William Strauss, senior economist and economic adviser with the Federal Reserve Bank of Chicago, spoke to business leaders at the annual economic outlook luncheon hosted by the DeKalb County Economic Development Corporation. Strauss has addressed the same group for the past several years now.
"The advantage to returning is the ability see how I've done with my predictions," Strauss said.
In 2013, he predicted the economy would expand at about a 2 percent annual rate, in line with its current trend, and a little above to start 2014.
"That's exactly what has materialized," Strauss said. "We're still kinda muddling along, growing at trend."
The economic recovery from the Great Recession, which ended in June 2009, has not resembled previous recovery periods after major recessions, Strauss said. For example, economic activity incresed more than 20 percent from the lowest point of recessions in the mid-1970s and early 1980s. This time, economic activity has increased by only half that.
On the housing market, Strauss said the forecast calls for a gradual recovery in housing with 1.1 million housing starts predicting this year and 1.3 million predicted in 2015. He said a healthy number is about 1.5 million, leaving new home construction still a bit anemic.
"Housing prices are finally moving up," Strauss said. "The market is on the mend."
The stock market has improved since March 2009, making up all of the ground it lost and returning to pre-recession levels, he said.
Employment gains are being seen, he said, but not at the level needed, he said. Although the 8.7 million jobs lost during the recession should be fully recovered sometime this year, that does not take into account that the workforce has grown by 1 million people each year since 2009, Strauss said.
Unemployment rates are down, but he said about 100,000 jobs should be added every month. He said unemployment remains high in Illinois, and he's nervous about the challengers the state's fiscal position might be putting on the economy.
"The taxpayers in Illinois were given a bogus deal," Strauss said. "The demand for more services has been continuously deferred, and the temporary tax increase does not address the problem."
Overall, Strauss said he expects the U.S. economy to expand at a pace slightly above trend in 2014 and employment to rise moderately.
Castle Bank Vice President Ron Bemis thought the presentation provided a generally positive outlook.
"It appears Mr. Strauss expects 2014 to be similar or show slight improvement when compared to 2013. The economy is expected to continue to move forward with modest gains on most economic fronts," Bemis said.
Chuck Kaiser, NB&T senior vice president and senior lending officer, was pleased with what he heard.
"We believe in our community and its ability to thrive, so it was good to see evidence of economic improvement in 2013 and a generally upbeat prediction for 2014," Kaiser said.