Expert sees recovery slow, but gaining steam
By Cindy Wojdyla Cain email@example.com January 10, 2013 4:38PM
Updated: February 12, 2013 2:40PM
ROMEOVILLE — The U.S. economy is continuing to heal from The Great Recession, but a full recovery isn’t expected until at least 2014, a Chicago economist said Thursday at Lewis University.
“Things are getting better,” said Daniel Sullivan, executive vice president for the Federal Reserve Bank of Chicago. “They’re headed in the right direction, but they’re getting better pretty slowly.”
Sullivan, who was the keynote speaker at the Will County Center for Economic Development’s 2013 Economic Forecast luncheon, said most economic forecasters believe the economy will ramp up in 2014.
In contrast, some experts believe the country will never again attain the economic growth level that it once had and unemployment rates won’t fall much below 8 percent, he said.
“I think there’s really very little evidence for that kind of story,” Sullivan said.
He said he is optimistic because the job growth is up to 200,000 a month, unemployment is decreasing, the economy grew by 3 percent in the last quarter, retail and car sales are up and home construction is rising.
Also, the Federal Reserve is working aggressively to push long-term interest rates lower by buying $85 billion a month in bonds, Sullivan said. With long-term interest rates low, consumers are more likely to buy cars and homes, pay off their debt and stimulate the economy, he explained.
Even with positive economic signs, he added, there are two main “headwinds” the country is fighting through to recovery: Concern about recessions in Europe and federal fiscal austerity measures that could shrink government spending.
But rebounding state and local economies — Illinois excluded — could help offset a contraction in federal spending, Sullivan said.
The federal reserve’s goal is to get unemployment below 6 percent and keep inflation at a rate no higher than 2 percent. And most economists think federal officials should work on long-term solutions to the country’s deficit but not in a way that creates more short-term problems, Sullivan said.
U.S. Rep. Bill Foster, D-Naperville, who attended the luncheon, said another key to the recovery is home values.
“The average American lost $50,000 in the crisis,” he said. If prices rebound, “At that point, we’re pretty much healed.”
Also at the luncheon, John Greuling, president and CEO of the center for economic development, detailed a 2013 local forecast.
A major office headquarters will be built in the Interstate 355 corridor.
More than 5,000 new jobs will be created and the unemployment rate will drop to 7 percent in the county.
The south suburban airport governance issue will be resolved.
A major retail development will break ground.
There will be major progress on the Illiana Expressway.
The multijurisdictional issues plaguing two intermodals will be resolved.
Greuling made one more less positive prediction.
“The state will not solve its economic problems and we will be even less attractive for business.”