BAXTER — The Brainerd Lakes Area Development Corp. bought a vowel and added the word Economic to its name.
The new name, logo and focused mission to be ready to grow as the economy recovers were all on display at the nonprofit organization’s annual meeting Tuesday at The Lodge at Brainerd Lakes in Baxter.
And the economy was center stage.
While the Great Recession officially ended in June of 2009, Tom Anderson, Minnesota Thermal Science and BLAEDC board president, said it still has
its grip and the slow recovery continues to take a toll on the area economy, its businesses and people.
“We believe that we have weathered the worst, that better economic times are ahead of us and we have learned from the past,” Tom Anderson said.
Scott Anderson, Wells Fargo director and senior economist, was the keynote speaker at the BLAEDC event.
“The economic and financial data has been ugly for the past three years,” Anderson said. “This recovery has been almost as rough as the recession.”
Anderson said the U.S. economy has been stronger than expected, raising expectations for economic growth in 2011. As corporations experience record profits and increased consumer spending reduces inventories, Anderson said job growth will follow as companies reinvest and grow.
Consumers went back to the stores in the fourth quarter of 2010, Anderson said, noting a 4.4 percent increase in consumer spending was the best increase in more than five years. But he said the top 5 percent income bracket is driving 40 percent of spending as many Americans are not seeing the recovery yet. That, Anderson said, is a disconnect around the country as indicators and consumer spending rebound but people do not feel better about the economy.
And he said the growth in personal income is still supported, in part, at the federal level.
While the stock market’s rebound rebuilt some wealth for people, many households are still facing declining home values. The asset bubble collapse meant a lost of $17 trillion of wealth, or about 20 years of private savings. While $10 trillion was rebuilt, it mainly from stock gains, Anderson said.
“We are expecting stronger job growth,” he said, adding everything points to being on the verge of accelerated job growth in the private sector.
Anderson said the Obama compromise bill will increase the debt, through extension of jobless benefits and tax cuts, but also added stimulus to the boost job growth. But he noted it will take a lot of growth to replace the estimated 8.4 million jobs lost since the recession started.
It isn’t overstating it to call this period after the Great Recession as the mother of all jobless recoveries, Anderson said. He expects 2 million jobs to be added in 2011. The first job growth has been in manufacturing. But service jobs account for 80 percent of the economy, Anderson said. Construction jobs aren’t expected to recover in the immediate future with the industry bouncing on the bottom, Anderson said.
There were spikes in homebuying but after tax credits ended, the buying plunged downward. There are more than 3.5 million homes on the market today, Anderson said, noting it will take years to absorb, especially on the high end. At the current sales pace, there is two years worth of housing inventory. Home prices may bottom out in early 2012, Anderson predicted.
“This is the worst housing downturn in the U.S. ever,” Anderson said, noting to get close people have to go back the Great Depression. The economy is firing on all other cylinders right now, Anderson said. There has been a decline in credit card debt, but Anderson noted that is in part because of tightened credit with 125 million fewer credit cards in the U.S. now than two years ago.
Looking forward, Anderson said he thinks banks will be providing more business loans freeing up the tight credit, but the housing market remains a big risk factor with a shadow inventory of homes on their way to foreclosure. And the nation’s deficit, at 10 percent of the gross domestic product, is unsustainable, he said.
“None of the political choices will be all that palatable,” he said.
Anderson has more than 15 years of experience in macroeconomics. Based in Minneapolis, Anderson is responsible for the analysis and forecasting of international, national and regional economic trends. He was recently named one of the top 10 economic forecasters in the country by USA Today for 2008.
More about BLAEDC’s efforts and plans for the future will be in the Dispatch weekender in the Business/Money section.
RENEE RICHARDSON may be reached at renee.richardson@brainerddispatch.com or 855-5852.
