Economist: Area a “Pocket of Prosperity”

Dr. Bruce Yandle, former Executive Director of the Federal Trade Commission under President Reagan, often sees a sign of economic recovery when he looks out from his front porch.

Yandle lives near the train depot in Clemson and is a train buff himself.

“I can count the cars on the freight trains, and I can tell if the trains are getting shorter or longer,” Yandle said. “They're getting longer. I know what's in every container that goes by - happiness.”

He knows the containers are going to places that are demanding the products, and traveling from places happy to ship it, he said.

Yandle says that while the next several years will not see tremendous GDP growth, there are many encouraging signs that the economy is recovering and will continue to do so.

One of those signs? The size of oil spots in parking lots. Yandle says people go without fixing their cars during tough times. He's seen the size of oil stains in parking lots shrink recently, so he knows more people can either afford a new ride or afford car repairs.

Yandle delivered a “State of the Economy” address at a special Easley Chamber of Commerce luncheon Thursday.

“The conversation we could have today is a whole lot better than the one we might have had last year,” he said.

Yandle is especially optimistic about the Upstate's economic future. He says that Pickens County and the surrounding area are one of many “pockets of prosperity” that haven't been hit as hard during the recession.

The Miliken Institute just named Greenville as one of its Top 200 Workable Cities in America, Yandle said. Greenville ranks 51^st on the list, up from 112 last year.

“This is the Greenville-Easley-Mauldin Metropolitan area,” Yandle said. “So you and I are in a good spot.”

The unemployment rate in Pickens County in November was 7.5 percent.

“Another indicator of pockets of prosperity,” Yandle said. “For the nation, it was 7.8 percent. For South Carolina, it was 8.3. For our neighbor Greenville County, it was 6.6. So we're in a good spot.”

Yandle spoke about the global boom, the “U.S. Gloom,” and the surge in South Carolina.

The Congressional Budget Office, the International Monetary Fund, the Federal Reserve Banks of Chicago and Philadephia and other predictors are saying that growth of Gross Domestic Product will be very slow this year and next year – about 2 percent growth, Yandle said.

“If you like the rate of growth in 2012, then you ought to really be happy in 2013, because it's going to be about the same,” he said. “Not a lot to get excited about, but it is positive, so we have to be thankful for that.”

Though that growth will be slow, it is growth, Yandle said.

“We're gaining ground,” he said. “I don't think that we're on fragile territory.”

Our slowth growth aside, Yandle said the planet is experiencing “the largest economic boom in history.
“There has never been anything as wonderful as this for the world economy,” Yandle said.

He said some many people are coming out of poverty worldwide that the United Nation's has to “revise its goal upward” because the numbers have already hit 30-year goals, Yandle said.

China and India are experiencing rapid growth.

Even though that rapid growth is not happening here, “we are connected” and the state and nation will benefit from it, he said.
South Carolina's growth of exports in 2011-2012 was 21.4 percent.

China was one of our biggest customers for exports, Yandle said.

“We are connected to that prospering world in a very meaningful way,” he said. “30,100 people in the Greenville Metropolitan area are employed by way of exports. Almost 15 percent of income in this region comes from exports.”

Yandle said he had “lots of good news” to share with Chamber members.

“Retail sales have completely recovered in America,” he said. “Right now we're above where we were when the big cloud came. That says that consumers are out there buying. That means confidence.

The housing boom was too good to be true, but housing is recovering, Yandle said.

“We're seeing stabilization in the median price of homes sold,” he said.

The recession caused both the marriage and divorce rate to go down and saw students returning home after being unable to find jobs.

As the economy gains strength, more people will get married and divorced and students will move out – spurring construction and rentals, Yandle said.

If housing continues to recover at the same rate, it will be back to pre-recession levels in 2016, he said.

“Our national economy cannot get up on it's legs and walk very fast until housing and construction begin to get well,” Yandle said. “That's in the works.”

Manufacturing in America is also on the rise, recovering even after manufacturing in 10 states were hurt heavily by Superstorm Sandy, he said.

He said he believes employment will return to pre-recession levels by the second quarter of 2013.

However, that doesn't mean the unemployment rate will return to pre-slowdown levels, due to a few “million more people in the workforce by then due to population growth.”

“The unemployment rate will probably be higher than it was in 2007, but there will be a lot more people working,” Yandle said.

There is still “regime uncertainty” impacting the economy and business decisions, Yandle said.

“We economic players, we don't know what the rules are going to be?” Yandle said. “We don't know what healthcare is going to cost. We're trying to figure that out. We don't know what's going to happen with capitol gains taxes. Regime uncertainty is plaguing us right now.”

He said the economy is operating at 92 percent capacity.

“Show me any other economy on the face of the Earth that is operating at 92 percent of capacity,” Yandle said. “Even in the best of times, we're operating at 96 percent. So we are four percentage points away. There's income being produced, there's wealth being produced, even in these tougher times.”

Over-regulation threatens growth, Yandle said.

“There's been an outpouring of new regulations,” Yandle said. “We have an economy that is struggling and it's really just counter-intuitive that we as a country would choose at this time to lay more constraints.”