PLAINS TWP. — Tim Quinlan knows that a person's perception about the strength of the economy is often tied to his or her own financial situation, but the truth is that the national economy is doing even better than it was before the Great Recession.
Quinlan, an economist with Wells Fargo Securities, painted a positive picture before about 130 area business leaders as the featured speaker during the 2013 Global Economic Outlook Breakfast presented by the Greater Scranton Chamber of Commerce and Greater Wilkes-Barre Chamber of Business and Industry on Wednesday morning at the Woodlands Inn & Resort.
“We're growing. We're not growing at our full potential, but we could be if consumer and business confidence were both a little bit stronger,” Quinlan said.
That lack of confidence is tied to a lack of clarity coming out of Congress, he said.
In Pennsylvania, economic growth and expansion might not be as easy to see. Pennsylvania's 8.2 percent unemployment rate is higher than the national average, which might explain the sour feelings toward the economy locally. There are, Quinlan noted, more people actively looking for work, signaling more confidence about potential job prospects here than in other states.
Meanwhile, the workforce as a whole is “cranking out more” — with about 3 million fewer people on payroll.
So, what's driving the economy back to where it needs to be?
It begins with the national housing market, Quinlan said. The market traditionally sees about 1.5 million new homes needed each year. The housing bubble created about 1 million extra homes per year before the crash. There has been a pent-up demand for homes in the last few years, and home prices are appreciating again.
It will take about five years to reach a new state of stability, Quinlan predicted, and new home construction to erase some of the millions of jobs still missing from the workforce.
There is slight growth attributed to consumer spending at about 2 percent, as well. “Spending growth is not going to be what it was in the last cycle, but it's still positive,” Quinlan said.
“Businesses are swimming in cash. The problem is that they're not really spending it, at least not in a meaningful way,” Quinlan said, noting that small-business owners are more concerned with taxes and regulation than they are with consumer spending.
The goal, he said, isn't necessarily to return to pre-recession numbers as a model for success. More important, we should look to return to long-term average rates of new home construction and consumer spending and confidence as benchmarks.
“I think, generally, employment has been growing for four years, home prices are beginning to appreciate again,” he said. “If people aren't beginning to feel better about things, they can at least see the light at the end of the tunnel.”