Two local experts on the economy delivered a restrained assessment of the financial landscape during an annual Asheville forum on July 15, a forecast that left little doubt that the current recession will leave a lasting impact.
Tom Tveidt, director of the Asheville Metro Business Research Center, and James F. Smith, a national expert who is chief economist for Parsec Financial Management, delivered their presentations to a full house at the Diana Wortham Theatre. Each year, the Asheville Area Chamber of Commerce invites experts to sum up the previous year's economic activity and prognosticate.
In a sharp departure from last year's mostly rosy report, both men discussed the economy's steep decline, saying it will be months before things start to turn around.
Smith predicted 2.5 percent economic growth nationally in 2010, and 3.5 to 4.6 percent growth in 2011.
"The main reason I think we'll have pretty decent growth … is the simple self-preservation instinct of all the people sitting in Congress," he said. With people voting their pocketbooks, the politicians in charge will be motivated to get the economy rolling, he reasoned.
Lacing his presentation with references to President Barack Obama's administration, Smith said the $787 billion economic-stimulus bill approved earlier this year has "done nothing" to fire the nation's economic engines.
"If you want stimulus to work, you give money to consumers. You don't have all these crazy schemes," said Smith, adding that the federal government has committed a total of $11.5 trillion to righting the economy, or $42,105 per man, woman and child in the U.S. "As my wife says repeatedly, just send me the check."
Economic indicators, he noted, point to the recession having bottomed out in April. Since then, such indicators as vehicle sales and initial claims for unemployment have continued to be down compared with last year, but not as much. Technically, that probably means the recession's over, he said.
"Does that mean your businesses boom? Of course not," Smith observed. "We're going to have very slow growth for a while."
Citing historic boom-and-bust cycles, Smith said the U.S. economy has been through this more than once, "and we always come back stronger than before." But the key, he maintained, is smaller government, lower taxes and less government regulation.
Tveidt, on the other hand, focused on local numbers. Last year, he'd called Asheville's unique economy "recession-resilient." But this time around, he said, all the information points to "seismic shifts in our economy" that will likely be long-lasting. "The waves we've ridden on the last decade or two have changed."
Asheville's economy has been buoyed by growth in the health-care, manufacturing, construction, business services and leisure-and-tourism sectors, said Tveidt. Over the past year, however, the Asheville area's economy lost 8,100 jobs, mostly in the manufacturing and business services sectors. Those losses ended a record streak of 51 straight months of job growth for Asheville, he said.
And while the "free fall" may be over, Tveidt said new hiring in the health-care sector will be slowed due to the prospect of national health-care reform, while manufacturing will continue a trend of "smaller, faster" production models. The tourism industry will likely start to rebound, but the construction sector will remain slow, because of the down real estate market and the fact that fewer people are moving to Asheville from big markets such as Florida, California and New York.
Nonetheless, Tveidt concluded his evaluation on a high note, emphasizing that a number of planned projects, such as the Hotel Indigo downtown and the Antler Hill Village at Biltmore Estate, should start kicking in. Meanwhile, Asheville's overall "brand" remains strong, he said. And local businesses are already making a significant shift toward a green economy, which could signal new growth.
Are you all trying to brainwash me?