News Column

Economist Upbeat About Recovery

May 3, 2013

Wells Fargo economist Jim Paulsen doesn't agree with critics of the U.S. economic recovery.

"I think we can still have a good recovery but it's going to be different," Paulsen said in an address Thursday at the Pueblo Economic Development Corp.'s quarterly luncheon.

Robust growth in the U.S. economy is less likely because the country's labor pool has been shrinking since the 1980s as the baby boomer generation moves into retirement, he said.

Still, the current recovery is gaining ground and growth in the nation's gross domestic product will average about 3 percent in 2013, higher than the 2 percent many other economists forecast, he said.

"I definitely agree we have a slow-growing economy but I don't think it's broken," Paulsen said, later adding that the recovery "is about as good as we can get" given the aging population.

The visit to Pueblo was a first for Paulson, based in Minneapolis and a frequent guest on business news networks such as CNBC.

At the start of his talk, Paulsen cautioned his remarks would focus only on the U.S. and global economy and not any local trends.

In Pueblo, as in many parts of the country, the recovery remains even slower with sales

activity and home construction flat and unemployment rates still in double-digits.

Elsewhere at the luncheon, PEDCo President Jack Rink issued a report on current job prospects that was slightly more upbeat from the group's last meeting in January.

"We've seen some improvement (but) it's still tough out there," Rink told the estimated 200 members of the group who attended the luncheon at the Pueblo Convention Center.

PEDCo is in various stages of talks with 12 prospects, up from three from the prior quarter, Rink said. The agency is in serious negotiations with three of them, he said.

As for the U.S. economy, Paulsen blasted the media for what he termed was their steady diet of negative stories about the economy.

A major part of any recovery is a restoration of consumer and business confidence and the ongoing stories about skepticism in the recovery are not helpful nor accurate, he charged.

Offering an upbeat view of the recovery, "We have gone from dead-on-arrival to ready to rockand- roll in a very few short years," he said.

He dismissed worries about higher taxes and government spending cuts. "I think we're at a place today where we can handle fiscal tightening," he said.

He flatly rejected the idea that the improved U.S. jobless rate is the result of a large number of people dropping out of the labor force. "That couldn't be more bogus," he said.

Longer term, he's optimistic that emerging countries over time will become major buyers of U.S. products and services, he said.

He noted one area of concern: Inflation.

A spike in inflation could jeopardize the recovery. But as of now, he's confident in the Federal Reserve's handling of monetary policy, including stimulus measures, he said.

Source: (c)2013 The Pueblo Chieftain (Pueblo, Colo.). Distributed by MCT Information Services.

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