The U.S. economic recovery that officially began five years ago this month has reached “middle age,” according to a 2014-15 economic forecast released Thursday by Chapman University’s A. Gary Anderson Center for Economic Research.
By middle age, Chapman’s economists mean that the duration of the current recovery is roughly average for the post-World War II era, although a number of recoveries have been far more robust.
That includes the Reagan recovery of the 1980s, which followed a deep trough under President Jimmy Carter, and the President Bill Clinton expansion, which followed a mild recession under President George Herbert Walker Bush.
The Chapman forecast speculated on whether the Obama recovery, such as it is, will become a “gray panther.” In other words, will it continue beyond the post-World War II average of roughly 60 months or should we start expecting tell-tale signs of a new recession?
We confess that we’re not especially confident in the staying power of the current recovery, which is nowhere near as strong as those under Presidents Reagan and Clinton, respectively.
Indeed, we think it far more likely that we’ll see an economic downturn during President Obama’s final two years in the White House than the prospect that we’ll see the kind of healthy growth in the nation’s economic output, and concomitant job creation, which lifted most boats, if not all, during the 1980s and 1990s.
Chapman’s economists are not so down on the Obama recovery. In fact, they see a silver lining in the fact that real gross domestic product has increased a total of only 11 percent since June 2009. “This suggests,” they say, “the recovery has legs despite the fact that it will soon be moving past the average age of post-WWII recoveries.”
Chapman’s updated forecast also foresees stronger economic growth for California.
It notes that the state Employment Development Department in 2013 underestimated payroll job growth throughout the state, attributing the undercount to EDD’s inability to accurately measure both newly established and existing small businesses.
Overall, California employers added 447,000 payroll jobs in 2013, according to Chapman. Most important, notes the forecast, is that “hiring was the broadest in six years with almost every major sector of the economy showing positive job growth.”
Construction has once again become a pillar of the state, boasting the strongest job growth of any of the major sectors. Higher home prices, coupled with a limited supply of unsold homes in many markets “induced a surge in building permit activity and a rebound in construction spending,” according to Chapman’s economic forecast.
Chapman’s economists expect the second half of 2014 and the whole of 2015 to be much like the first half of this year for the nation as a whole, and for California.
No unexpected economic boom. No unwelcome economic downturn. All things considered, we’ll take that.
— From the Orange County Register