Jobs, global markets fuel recovery
If history is any guide, Portland may recover more quickly from the recession than other parts of the United States based on its employment trends.
In the recessions of 1991 and 2001, Portland labor markets recovered faster than the national average, spending about four months less than other parts of the country bumping along the bottom of the 1991 recession and two months less in the 2001 slump. But its most remarkable performance came in the 2001 recovery, when Portland achieved renewed growth in 11 months versus the 33 month national average.
"Sometime between September and February we should see unemployment bottom out," said Bruce McCain, an investment strategist and economic analyst with Key Private Bank, at a Key4Women forum held last night in Portland. "In the Portland area, that should occur at the same time or earlier."
McCain said Portland area's modest population growth is a significant advantage for job recovery, a recovery that could be enhanced through increasing exports that take advantage of a weakened U.S. dollar in emerging global markets. He added that a higher concentration of jobs in health care provides stability in the local employment market and opportunities for growth. Health care, finance and retail accounts for about 35% of the local employment market compared with a national average of 27%. Government, manufacturing and professional services tally 32% of local jobs, versus a 40% national average.
A commentator on CNBC and Bloomberg TV, McCain predicted there will be a palpable surge driven by pent-up demand among consumers who will regain enough confidence in a recovery to spend again, and among businesses that have cut to the bone to ride out the recession. Those lean businesses will begin to restore staffing levels to pre-recession levels.
"I'm seeing much better signs and sentiment about improvements from business ... they are more optimistic as we emerge from the recession," he told the crowd.
McCain warned, however, that consumer spending must be matched with income, to avoid the financial pitfalls of excessive debt - something he fears the federal government is unlikely to learn.
"We have no discipline around debt," he said, citing federal exhausted reserves and an ever-increasing deficit. That makes us vulnerable to inflation.
"We import money like we import oil," McCain said. "Overseas lenders are likely to cut back when inflation starts to rise," leading to a situation where the government can't pay off what it owes. "The government can stop spending or print more money to cover the deficit, then we reach hyper inflation."
But the global economy can play a huge role in the nation's ability to regain its economic underpinnings. Industries can retool to develop competitive strengths in emerging world market, McCain said, likening that effort to a comparison of NBA stars Michael Jordan, 46, and LeBron James, 24. While James is the younger, more energetic player, Jordan has the experience and smarts to be competitive. Likewise, mature U.S. industries can exploit their advantages over emerging industries throughout the world.
McCain said those growing countries represent more than just new markets for U.S. industries. He also advises clients to invest in them: about 30% of their portfolios in established international markets and 10% in emerging markets.
"I realize that's not the most comfortable place to be investing for a lot people, and there are issues, around accounting, currency, political stability, but I think that's one of the most crucial things people can do at this time to generate gains and insulate against inflation risks longer term," he said.
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