The nation’s fragile recovery in the aftermath of the Great Recession is endangered by radical political policies on the left and on the right, a Northeast Ohio economist says.
“In September 2008, you looked into the abyss and saw 1932. In fact, we’ve forgotten how difficult that [was],” Ned Hill, dean and professor at Cleveland State University, said Thursday at the annual Economic Outlook breakfast program sponsored by the Greater Akron Chamber. The national economy ground to a halt four years ago because of the deep financial crisis that hit it, he said.
“The recession was officially over in 2009,” Hill said. “But how many employers here felt bright, happy and robust in 2009, went out and laid out lots of money for new capital and just couldn’t wait to hire a whole bunch of new employees? It didn’t happen, did it?”
Hill, a well-known Northeast Ohio economic expert, spoke for an hour and then took questions at the Hilton hotel in Fairlawn before a couple hundred people.
The “massive heart attack” that hit the economy in September 2008 is taking a long time to recover from, Hill said.
There are signs now of a weak recovery, he said. That could be hurt by how what is being called the “fiscal cliff” is handled along with other factors, he said.
“It isn’t going to take much to knock it off its pace,” Hill said. “And frankly, if we continue to have the politics we’ve had for the past two years going forward, I can guarantee you a mild recession.”
Consumer spending is too weak and will not be able to drive the growth in the nation’s economy following the Great Recession, he said.
Extremist, radical politics of the right and the left endanger the economy, Hill said.
“What I think we have to do is go back to traditional Ohio values,” he said. “Ohio values are based on optimism, faith in ourselves but also fiscal conservatism going forward.”
Political fads such as term limits for elected officials helped derail things in part by causing less collegiality, he said.
And gerrymandering of election districts by both Democrats and Republicans over the years has driven both parties to extremes, he said. “And when you drive parties to the extremes, facts don’t matter.”
Gov. John Kasich’s administration is doing the best job of state government managerial reform since the George Voinovich administration, Hill said.
Hill, in briefly reviewing a history of recent recessions, said Ohio jobs to date have failed to bounce back from the relatively short 2001 recession.
“We never came back,” Hill said. “That is the first recession in Ohio’s history where we never recovered the previous level of employment.”
The reason for Ohio’s lack of job growth was an artificially high dollar that “kicked the crap out of manufacturing and it made it very difficult to compete,” he said.
Ohio manufacturers are being helped by a now weaker dollar, he said. “We’re competitive again.”
Also in 2001, “we realized the base of the economy had not innovated in the previous 20 years,” Hill said.
Companies were getting by and competing by “leaning out, by getting more efficient,” he said. “Well, folks, if you lean out way too much, at some point lean becomes anorexia and you die.”
Northeast Ohio’s “supercompetitive economic base” is made up of manufacturing, chemicals, logistics and transportation and headquarters, “coupled with a broad push for innovation,” Hill said.
As a result, the region’s growth economies of the future are starting to show up, Hill said.
Nationally, it will take at least eight years at the current rate of job growth to reach levels prior to the Great Recession, Hill said.
The nation is about 10 million jobs short of where he thought it was going to be by now, Hill said.
The most current economic forecasts call for the U.S. economy to grow by 2.1 to 2.3 percent next year, he said.
“That is fragile, because what we really need to get people back to work is about 2.5 percent growth, and we’re below that,” he said.
In taking questions from the audience, Hill said that manufacturers’ enemies include parents and school guidance counselors who don’t know anything about modern manufacturing, including understanding that employees with the right skills can earn more than $60,000 a year.
“We have to realize this is an economy built on skills, not necessarily [college] degrees, that you get rewarded based on what you know, not how long you’ve sat in a chair,” Hill said.
“We also realize, we have to worry about work ethic. ... We have laws that prevent a kid between age of 16 and 18 being in a perfectly safe manufacturing environment. So, what did we do? We have discouraged them from understanding the joys of earning a job.”
Children need to go to school year round, with little or no summer break, Hill said. Schools need to be safe and offer after-school activities, he said.
After his talk ended, Hill said he is optimistic that the economy will improve.
The upcoming fiscal cliff is an important short-term event, he said.
“If it is badly handled, it could throw us into recession,” he said.
Northeast Ohio is entering what he calls the economic “supercycle, ” he said.
For instance, [because of Utica shale development] it is hard to find office space in Canton to rent.
Jim Mackinnon can be reached at 330-996-3544 or firstname.lastname@example.org