Wednesday, October 13th, 2010
Economist states opinion of economy improvement
By Margie Wuebker
NEW BREMEN - An economist with the Federal Reserve System believes the U.S. economy is improving, even though the slower than expected rebound continues to be a source of concern for many.
LaVaughn M. Henry, vice president and senior regional officer for the Federal Reserve Bank's Cleveland-Cincinnati branch, shared his philosophy Tuesday afternoon during the Southwestern Auglaize County Chamber of Commerce's annual banquet.
"I'm not D (Democrat) and I'm not R (Republican)," he said. "I am I (independent) and I don't have a dog in the fight in D.C. There is improvement ... numbers don't lie."
Henry pegged a 5 percent increase in Gross Domestic Product numbers during the last quarter in an economy that is two-thirds based on personal consumption. However, he admitted the current 9.6 percent unemployment rate is significantly higher than historical norms for this stage of recovery. However, the number includes a virtual army of census workers who have completed their assignments.
"People are not convinced the recovery is sustainable," Henry said. "Business has stepped up especially on the manufacturing side. Companies are again producing and people are starting to buy. That's good."
Other positive signs include a modest increase in personal income coupled with significant increases in personal savings.
"There is light at the end of the recession tunnel," he said. "It has made all of us much better at doing more with less. We use fewer resources and become more inventive."
The federal stimulus program continues to draw criticism with the economist explaining the measure was never designed to cure U.S. economy woes.
"It was a tourniquet designed to stop blood flow," he added. "A tourniquet lessens immediate danger, but it does not heal the patient."
Henry maintains there is reason for optimism even though consumer confidence still lags more than the government would like.
"Going into the recession, our expectations were that things were only going to get worse," he said. "Our expectations are slowly changing to a point where we believe the future will be better than the past."
Henry bets "dimes to doughnuts" economists will one day trace the problems back to a build up in debt.
"We were on the edge of a great depression," Henry said. "We were right there on a cliff especially in the financial markets. The bleeding has stopped and now it's a matter of getting healthy. America always comes back. It's just a matter of believing."