December 9, 2011
by Katy Ruth Camp
GALLERIA — Although many of the 500 attendees at Tuesday morning’s Economic Forecast 2012 breakfast hosted by Bank of North Georgia at the Cobb Galleria Centre were hoping to hear encouraging words for 2012, leading economist and guest speaker Dr. Albert Niemi Jr. spoke very few.
Niemi said 2012 will look much like 2011, with little to no improvement in the three key areas for economic recovery: job creation, housing starts and consumer spending.
Niemi, who was formerly the dean of the University of Georgia’s Terry College of Business and is now dean of the Edwin L. Cox School of Business at Southern Methodist University, has been the featured speaker for the breakfast for all 19 years BoNG has hosted the event, said Lauren Muzzy, the company’s communications director.
The main predictions and conclusions Niemi shared Tuesday morning were that Georgia and the rest of the U.S. are facing a very sluggish recovery; the poverty level is growing while the middle class is shrinking; it could be 10 or more years before the nation reaches a 5 percent employment rate; the crash of the housing market and its current stalemate are deflating the economy; and manufacturing in the U.S. has virtually disappeared.
Niemi said the real GDP for the U.S. will close out in 2011 at 1.7 percent and he predicted that 2012 would end at 2.1 percent.
“Anything less than 3 percent is a bad year,” Niemi said.
Niemi also said the nation’s unemployment rate will close at 9.1 percent this year, and predicted that it will only drop slightly at the end of 2012 to 9.0 percent.
And Niemi said the data that is used every month in terms of the number of people unemployed is actually far less than what the nation is really facing.
Niemi put it this way: The government considers those unemployed as people who do not have a job, but are actively seeking employment. That makes up about 14 million people at 9.1 percent. Then there are those who are considered underemployed, because they are working at jobs significantly below their skill sets and previous incomes, but are working odd jobs to provide some sort of income, such as an attorney working at a coffee shop. Those are estimated at 9.3 million people, or 6.0 percent. Then there are what Niemi referred to as discouraged workers, who are unemployed and say they are not seeking employment. Niemi said the discouraged workers make up about 2.6 million people, or 1.7 percent.
So in total, Niemi said the “real employment” figure to consider is that the nation will end 2011 on a 16.8 percent unemployment rate with 25.9 million Americans out of jobs or working far below their skill levels.
Niemi said 8.4 million jobs were lost in the recession, and since it officially ended in July 2009, 2.1 million jobs have been recovered. So that leaves 6.3 million additional jobs that are needed to get back to 2007’s employment numbers and, in addition, 125,000 new American workers are entering the workforce each month, Niemi said. From January to October, America has averaged an additional 115,000 jobs added each month, Niemi said. So between those jobs needed each month, the discouraged workers who have basically given up on employment and the 125,000 new workers entering the job each month, Niemi said it would be January 2022 before America reached full employment if the nation added 200,000 net new jobs each month starting this month, or January 2018 if the nation added 250,000.
“That’s the reason the unemployment rate won’t go down next year,” Niemi said. “We’re not creating jobs fast enough to take care of the new workers entering the workforce. Those lost jobs are still out there …We’ve got so much uncertainty, it is paralyzing job creation. No one knows what the true cost of health care will be, where taxes are going, and we know the political environment is charged but we don’t know which direction it’s going to go, so that depresses job creation and companies muddle through with the employees they have until they see what will happen.”
Niemi said manufacturing and the science and technology fields are facing a shortage in qualified workers, because not enough students are earning degrees in science, technology, engineering and math....
Read more: The Marietta Daily Journal - Few encouraging words Speaker at business breakfast says to expect more of the same for a while