BELLINGHAM - A national economist is expecting slow, steady improvement in the economy in 2013, but getting back to normal growth is still a few years away.
Sprinkling in a bit of humor throughout his presentation, Bill Conerly provided some reasons for optimism as well as pessimism during his economic forecast, presented Tuesday, Feb. 26, by the Bellingham/Whatcom Chamber of Commerce & Industry.
Conerly expects the nation's gross domestic product to increase a little more than 2 percent in 2013 and above 3 percent in 2014. He's been told that's an optimistic outlook, but he doesn't think so, noting that the economy is performing below its potential.
"It will be 2016 or 2017 before (the economy) feels normal again," Conerly told the audience at the Best Western Lakeway Inn.
Conerly also warned that a recession is a possibility in the coming year. While the sequester debate in Washington, D.C., is getting much of the attention, he believes Europe's financial woes will be a bigger factor in determining whether the U.S. slips back into a recession. If a recession hits in the coming year, he believes the biggest impact would be on exporting, which is a key part of Washington state's economy.
The sector Conerly believes will experience the most growth in the short term is housing. Residential construction has remained well below replacement demand for several years, particularly in apartments.
In Whatcom County, residential construction is also below normal, but a major factor is the lower population growth. Population migration slowed when the recession hit five years ago and is now picking up again in some parts of the U.S., but not yet in Washington or Whatcom County. He expects that to change, however.
"I'm optimistic about this community," Conerly said. "I expect light to moderate growth in 2013 and 2014 to be better."
In the question-and-answer session following the presentation, Conerly was asked about the mood of consumers. Consumer spending still has a role in lifting an economy, he said. Currently spending is growing slowly, as consumers remain somewhat cautious. If that steady spending continues, in a couple of years it will hit a level where companies begin expanding. Currently companies are spending on equipment and other capital improvements to make production more efficient, he said.