Although there are some positive signs to be found in the local and national economic outlook, the panel (brought together by M&T Bank for a discussion called “An Economic Roadmap — What Comes Next?”) unanimously expressed the uncertainty that looms across all industries.
“We’re coming up on the two-year anniversary of the official end of the great recession,” said Gary Keith, an economist at M&T. “The plunge we took is going to take time to absorb and get past. For no reason should we feel we’re on a solid footing as a nation.”
Unemployment remains stubbornly high, both nationally and locally, Keith said, although employment in Richmond grew by 0.8 percent in 2010. Local employment is 6.6 percent below pre-recession levels. That’s 34,500 jobs that have not yet come.
One positive sign is that local temporary hiring grew 27 percent in the first quarter, perhaps a precursor to more permanent hiring down the road, Keith said. Construction employment rose 5.1 percent in the first quarter.
Employment levels in manufacturing, retail and financial services are all still falling.
Keith’s comments led into a panel made up of Bob Clark, president of Baskervill; Jerry Fox, partner-in-charge of Cherry, Bekaert & Holland; Dean Croushore, chair of the Deptartment of Economics at the University of Richmond; Mark Douglas, senior vice president at Thalhimer Commercial Real Estate; and Jack Woodfin, head of the Woodfin Company.
The panel was moderated by Hugh Newton, regional president for M&T’s Central Virginia operations.
Jerry Fox said there is a fair amount of merger/acquisition activity going on to keep accountants busy. But uncertainty remains.
“The word out on the street right now is people are cautious,” said Fox.
During the boom years, Fox said Cherry, Bekaert & Holland was hiring accounting students a year in advance out of college.
That trend, of course, has been curbed.
There are some positive trends to be seen in certain areas of the commercial real estate sector, according to Mark Douglas.
For some context, in 2007 there was 919,000 vacant square feet across 18 buildings in Richmond’s suburban office market, Douglas said.
That figure ballooned over the past couple of years but has come back down to 1.57 million vacant square feet across 16 suburban office properties.
“You can call it a recession, but in real estate — for us — it was a depression,” said Douglas.
The recent rise in oil and gas prices is also fueling uncertainty. Jack Woodfin, whose heating company deals in oil, knows that firsthand.
“Petroleum — that is the hot topic,” said Woodfin. “Supply is incredibly good, so that should say prices should go down. It’s the uncertainty that just keeps driving it up.”
Bob Clark said the field of architecture, typically seen as an early indicator of economic health, is slowly coming back.
“New buildings are still very rare,” Clark said. “Price competition is fierce.”
But again, that one word popped up in the conversation.
“For us, uncertainty is the biggest thing out there,” Clark said.
For Croushore, the comfortable confines of private academia allow him to worry about things further up the economic food chain, such as Federal Reserve monetary policy, inflation and the federal budget.
“From a guy who spent 14 years at the Fed, I think the Fed has made some bad decisions lately,” Croushore said.