I love listening to economist Nick Perna. He's got a doctorate in economics from MIT, but he talks like a regular person and makes listening to a lecture on economics both informative and fun. Every time the chamber's economic forecast luncheon rolls around, I get happy if the speaker is Nick because I learn something and it's definitely not boring. He didn't disappoint this time, either. He came bearing mostly good news, which is nice to hear after living with this stupid recession. Here's what I wrote for The Bristol Press (www.bristolpress.com) about what he had to say:
The worst, said economist Nick Perna, is over.
“The recession did end in August or September,” Perna told his audience at the annual economic forecast luncheon of the Central Connecticut Chambers of Commerce. “The overall economy stopped declining.”
The stock market, Perna said, is “clearly recovering,” but isn’t all better yet.
He said the national gross domestic product will grow about 3 percent each year – lower than an optimum growth of 4 to 4.5 percent.
Expect interest rates to go up about a point by the end of the year, Perna said, but told his audience not to worry about inflation.
“To me, what you should worry about is rising interest rates,” said Perna.
He said he does not think inflation will be more than about 2 percent over the next couple years.
Banks have a lot of federal money sitting in “idle reserves,” said Perna. “You can’t get inflation from idle reserves.”
Perna said it still could be years before the economy is fully recovered, but said things ought to be looking a lot better in about six months.
With national unemployment at 10 percent, Perna said, it will be five or six years before it comes down to half of that. One point a year, he said, would be a “major accomplishment.”
Introducing Perna, Rick O’Brien of Webster Bank said that the economist’s message isn’t always what people want to hear.
“He tells the truth,” said O’Brien, but “he says it in such a way it won’t hurt quite so bad.”
O’Brien said Perna, who delivers the chamber’s annual economic forecast nearly every year, has a doctorate in economics from Massachusetts Institute of Technology.
During the last recession, Connecticut fared far worse than most of the rest of the nation, Perna said, but the same isn’t true this time around.
From 1989 to 1992, the state lost 10 percent of its jobs, while the nation lost 2 percent, he said.
During this recession, Perna said, “We’re not doing any worse than the national economy.”
So if the national economy rebounds the way Perna expects it to, “so should we,” he said. Manufacturing output in Connecticut, he said, is growing.
The bloodletting of job losses – which had been 750,000 a month nationally – is substantially less, now down to 75,000 a month, according to Perna.
“Stability is not that far away,” he said.
The number of newly unemployed, said Perna, is also slowing down. Companies haven’t started hiring yet, he said, but they’ve stopped firing and are moving workers who had been cut back to normal hours.
For small businesses, Perna said, “We’re at the point where things are getting better.”
President Barack Obama’s biggest mistake after taking office a year ago, Perna said, was not having a big enough jobs package right away and veering off of that issue.
“It should have been just jobs, jobs, jobs and maybe reforming the financial system,” said Perna, to ensure that the problem didn’t recur.
Health care, he said, is a political problem that can be solved, but it should have been left to another time when the economy was in such dire straits.
Perna said though he and other economists “did blow it when it came to predicting the financial crisis,” the predictions he made last year for when to expect a recovery– at a time when things looked really rough – were on the money.
Things are looking better now, Perna said.
“We’re not in the same degree of unknown territory as we were two years ago,” said Perna.