The economy continues to improve, but one economist is already looking at trouble brewing down the road.
Kevin Caron, marketing strategist for Stifel Nicolaus at Stifel Financial Corp. in St. Louis, said today the economy is turning around, but he also said with a “very high confidence” there is another recession looming within a decade.
Caron was the final speaker at the Lebanon Valley Chamber of Commerce 2014 Economic Forecast Breakfast at Alden Place in Cornwall.
He pointed to the possible credit bubble in the emerging markets, where world investors flocked over the last few years, as a way the world could be plunged back into recession.
“We’ve been in recovery now for almost four years,” he said. “And we know from history recovery doesn’t last more than five or 10 years.”
He did highlight all the growth in the economy since June 2009, when the recovery started, including the high growth in employment, household assets, net worth and income.
But, he said, the median income has actually gone down since 2009, from $53,000 to $51,000 despite total income rising to $12.6 trillion from $10.9 trillion.
Combined with the “jitters” caused by the emerging markets, he said, another recession is likely within a few years.
“You’ve got the stock market growing by 70 percent last year. That’s not sustainable,” he said. “You’ve got the (Standard and Poor’s) up 30 percent. That’s not sustainable.”
Caron focused on the overall state of the economy, while other locally based speakers stuck to certain segments. Robert J. Longo, president and CEO of the Good Samaritan Health System, said his hospital’s planned partnership with York-based WellSpan Health, announced earlier this week, is not a done deal yet. It should be complete by the end of this year or early in 2015, he said.
“If you’re going to merge, you want to do it the right way,” he said, citing industry data that about three-quarters of hospitals in the country are at least considering some kind of affiliation to meet challenges in the marketplace. “I truly believe the community will benefit from what we decided to do.”
Scott Sheely, executive director of the Lancaster County Workforce Investment Board, identified three industries — biotechnology, logistics and transportation, and agriculture and food processing — where the county is poised to grow because of its position in the market.
Daniel Betancourt, president and CEO of Lancaster-based Community First Fund, said large-bank lending to small businesses — especially those under $1 million in sales — has decreased dramatically since 2009. That’s made Community First Fund a popular alternative to bank lending, but he said banks must return to small-business lending.