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Economist Offers Mixed News at Vision Conference

The economy is growing, albeit not enough to put a major dent in unemployment, says one economist, who also believes international events may have more influence on the U.S. economy than President Obama

by Staff
June 7, 2012
Economist Offers Mixed News at Vision Conference

Infrastructure spending could help the economy, but such a measure is not likely to make it through the current Congress, Gin said.

3 min to read


The economy is growing, albeit not enough to put a major dent in unemployment, says one economist, who also believes international events may have more influence on the U.S. economy than President Obama.

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Alan Gin, associate professor of economics at the University of San Diego, presented an economic outlook at Qualcomm Enterprise Service's Vision 2012 user conference, held June 4-7 in San Diego.

Gin noted that the latest jobs reports painted a grim picture for the economy since the nation's GDP needs to grow at an annual rate of at lease 3.5 percent in order to generate enough jobs to meet the demands of population growth.

At 1.9 percent, the GDP rate for the 1st quarter of this year falls well below that threshold. But even though 1st quarter growth was not that good, it was better than a year ago, Gin noted.

While employment growth and private spending made positive contributions to the GDP rate, cuts in government spending at all levels have produced a negative drag on the economy, he noted.

Since the depths of the recession, the economy has gained 3.77 million jobs, or 40% of the more than 8 million jobs lost due to the recession. When discouraged workers are included - those who have given up looking for work and are therefore not counted in the official rate, unemployment stands at 14.8%.

The most recent jobs report showed fewer than 70,000 jobs added in the previous month when the economy needs 250,000- 350,000 jobs added per month to get the economy back on track.

Gin says his outlook for the remainder of the year is for positive, but weak, growth of 2.5% percent to 3% GDP growth. The economy needs to grow at a rate of at least 4.5% "to put a dent in unemployment," he says.

Gin expects prices to remain relatively stable, other than energy and food prices, which can swing wildly due to unforeseen circumstances and he said interest rates will remain low.

Specific to the trucking industry, Gin said diesel prices will continue to rise as global demand increases. On the demand side, he said things look more positive, with industrial production increasing, shipments increasing and retail sales rebounding -- all things that point to more business for trucking companies. Housing and construction, on the other hand, are still lagging. He expects to see some firming in the housing market in 2013.

During a Q&A session, Gin said that international issues could be a big problem for the U.S. economy. "The U.S. president can't do much to impact the economy in light of these factors," he said. "The leader of Israel could have a bigger impact on the U.S. economy than President Obama," referring to concerns about military action against Iran.

As for putting people back to work, Gin said, "something needs to be done about the nation's infrastructure. That puts people back to work." He said the 2009 stimulus, while helping some, should have been targeted strictly at infrastructure, but noted getting such spending authorized through the current congress was probably unlikely to happen.

He said that while he supports reducing the nation's deficit, "with the economy in such dire straits, you should focus on improving the economy before attacking the deficit."

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