TRENTON – The Garden State Economic Forum kicked off with a presentation that paints the state and national recovery as slow and painful, but promising nonetheless.
Joel Naroff of Naroff Economic Advisers predicts there will continue to be “a slow, grinding economy,” given that the two business sectors that are usually the first to rebound – housing and financial sectors – have been sluggish compared to prior recoveries.
That’s a double whammy. The housing market was responsible for different types of jobs, from the people who supplied the lumber to build the homes to the people processing the mortgages. And, banks are reluctant to loan money.
“They are not being aggressive right now,” he said. “They are still rebuilding capital.”
The economic problems don’t end there, he said, as other areas added to the problem.
Oil prices skyrocketed again, between late 2010 and this past spring, which actually stunted the somewhat promising signs of recovery, such as steady monthly job growth.
Every $1.50 increase in gas prices takes out $150 billion in purchasing power that would have stimulated the economy.
Gasoline wasn’t the only area where consumers were forced to spend more. Food prices also leaped due to high demand from developing nations with growing middle classes, China and India for example. The United States remains one of the largest food suppliers on the globe, the economist said.
Other “hurdles” include the European debt crisis and the massive job cuts in the public sector, which Naroff pointed out could create problems down the road. “There is no such thing as a free budget cut,” he said.