At last month's ABM Executive Forum, economist Joseph E. Kasputys said that the U.S. economy will grow at about a 2.25% rate next year and a 3% rate in 2012. He also told association members that they have the potential to help the economy grow faster.
U.S. businesses, Kasputys said, are sitting on mountains of cash that they are too cau-tious to spend. “Corporate cash is at near record levels,” he said.
Business media companies, because they bring buyers and sellers together, might be able to help corporations begin spending at least some of their cash again, Kasputys said. “Your mission at American Business Media is to get them to spend that money,” he said.
In addition to corporations sitting on their cash, consumers are not spending much. The consumer savings rate is approaching 7%, an unusually high figure compared with recent decades, Kasputys said, calling it an “epidemic of U.S. thrift.”
Also, he said high unemployment persists, with 30% of those out of work having been jobless for six months or more.
Kasputys said that typically a recovery after a recession starts very strong, with annual growth in the 5%-to-7% range. But the Great Recession was not a typical recession. “It was a balance sheet recession, not a cyclical recession,” Kasputys said.
Recoveries from such financial collapses tend to have longer, slower recovery cycles. “Usually it takes about four years for jobs to recover fully to where they were and about six years for housing prices to recover,” Kasputys said.
He also said the U.S. is risking inflation with its recent “quantitative easing,” in which the Federal Reserve committed to buying $600 billion in Treasury bills. —S.C.