SCHAUMBURG, Ill. U.S. economic growth, as measured by gross domestic product, is stuck in a "2-percent rut" due to persistently slow job creation, according to Dan North, chief economist for North America at credit insurer Euler Hermes, adding that this holds down consumer confidence, consumer spending, small business optimism and capital spending.
"We are not gaining jobs fast enough. We still have 2 million fewer jobs than before the recession," he told attendees Sept. 9 at the Metals Service Center Institutes Economic Summit in Schaumburg, Ill.
The jobless have additional troubles. They are unemployed now for an average of 37 weeks, longer than in any previous recession, and they return to work at lower wages and more often in part-time rather than full-time positions. During the nine months they were looking for work, theyve lost some skills and might even be considered unemployable.
The nation as a whole has problems that the elected class seems unwilling to fix. Fiscal policy is a top concern. Every time the U.S. Treasury Department spends $10, it has to borrow $2.
"That is a tax the next generation has to pay when a bond or noteholder wants to cash in," North said. There is "no budget plan. The Treasury borrowed $100 billion last week. Its a bad idea."
As for the Federal Reserve, quantitative easing didnt work as planned and causes inflation of assets, he said. And "no efforts have helped the job picture."
North expects the debt ceiling debate will raise its disruptive head this fall session, "shaking everyones confidence yet again."
The positives for the United States are cheap energy and automotive demand. He expects growth in the number of liquefied natural gas vehicles built to take advantage of the inexpensive fuel source.
The rate of insuring inventories and accounts receivables in the service center industry has "improved dramatically" since the recession ended, North said on the sidelines of the meeting. "We opened the faucets aggressively."
Before the downturn, he said, "we saw the recession coming and warned our clients. We told them we could no longer cover certain business (lines)," because inventory and receivables were about to decline in value (amm.com, April 6, 2009). "We had to control the risk."
Now, however, Euler Hermes acceptance rate of credit insurance applications is above 80 percent.