Economist Jay Bryson: 'We're moving in the right direction'
The good news: There is no recession in the immediate forecast.
The bad news: The economy is not booming.
The 2014 news: "We're moving in the right direction," and 2015 could be the year of the boom.
That was the message today from Jay Bryson, managing director and global economist for the Wells Fargo Economics Group, a perennial keynote at the Harrisburg Regional Chamber and Capital Region Economic Development Corp.'s annual economic forecast breakfast.
The U.S. economy is not quite back to 2003 or 2007 levels, but "we're getting there," said Bryson, a Lancaster County native.
He is projecting 2.8 percent economic growth this year and about 3 percent next year. Between 1992 and 2007, the economy averaged about 3 percent growth per year.
In dollar terms, this year's growth could be close to 5 percent, Bryson said.
Consumer spending, which makes up about two-thirds of the economy, is trending up slowly. But deleveraging continues to be evident on consumer balance sheets with no signs of stabilization, Bryson said.
"We don't see signs that people want to lever up," he said, though he cited growth in car loans and student loans. "People still perceive holes in their balance sheets."
That means elevated savings for the foreseeable future. In baseball terms, Bryson said, we're in the seventh-inning stretch.
An estimated 923,400 housing units were started in 2013, according to the U.S. Census Bureau and the Department of Housing and Urban Development.
Bryson said that number could grow by 15 percent this year and in 2015.
The demographics will support between 1.25 million and 1.5 million new units each year, which is "very achievable," he said.
On job creation, the U.S. has averaged about 190,000 new jobs per month over the last year. That is expected to continue, Bryson said.
If that number were to jump to 250,000 or 300,000 per month, consumer confidence would jump significantly.
The federal budget deficit and external factors, such as a war in the Middle East, which would raise oil prices, are concerns that could affect markets and hurt the 2.8 percent forecast.
Bryson said there is almost no chance foreign investors will dump U.S. Treasury securities.
"There is no alternative," he said. "U.S. Treasury securities are the cleanest dirty shirt."
And he doesn't expect any immediate market impacts from European countries in major debt, such as Spain and Italy. But that is not fixed, so the potential is there, he said.
Outstanding student loan debt, which is about $1 trillion, is not big enough to "bring the economy to its knees," he added. By comparison, there was about $14 trillion in outstanding mortgages in 2006, he said.
In Central Pennsylvania, we can expect a comparable rate of economic growth this year, Bryson said.