Time to leave the recession in the past?
One of the quirks of predicting and assessing the performance of an economic system is that we often don’t know with certainty what’s happening until after the fact. For example, it was early 2009 before we learned that the current recession officially began in the last quarter of 2007. Thinking back to late 2007, I would have been hard-pressed at that time to tell you that the economy was in official decline. But when we are dealing with massive, slow-moving systems like the U.S. economy, we have to expect a disconnect between personal experience and broad starting and ending points.
Similarly, it’s difficult right now to appreciate that what has become the Great Recession might be officially over. Although that has been suggested by many recent economic reports and prognostications, personal experience — ours and others’ — confirms that the symptoms of the “hiccup” (as one composites colleague recently called it, in an effort to cast the downturn more modestly) persist, including ongoing foreclosures, high unemployment, sluggish sales and depressed incomes. Despite this, like the coming of spring, we also see, as we look around, hopeful signs of economic life — the tentative beginning of the end of the hiccup.
Ray MacNeil, owner of Ray MacNeil Composites Consulting (Sewickley, Pa.), issued his economic outlook for the composites industry at Composites 2010, held Feb. 9-11 in Las Vegas, Nev., and echoed the notion that the economy appears to be standing on shaky recovery legs. Like many of the folks exhibiting at and attending the exposition, he endorsed the phrase of the week at the show: cautious optimism. First, however, MacNeil confirmed for everyone what is now painfully true: 2009 promises to be remembered as one of the worst years in the economic history of the United States. The poster child of this downturn is the U.S. gross domestic product (GDP), which dropped 2.45 percent in 2009, representing the largest decrease in the last 63 years. Which is a long time. Similarly, and not surprisingly, MacNeil reported that the composites market contracted a whopping 28 percent in 2009.
So, eager to leave the last decade behind, we now look more hopefully to 2010 and beyond: It now looks like the worst has passed, and MacNeil tends to agree. He forecasts for 2010, 2011 and 2012, respectively, U.S. GDP growth of 2.6, 2.8 and 3.8 percent. In the composites industry, for 2010-2015, he says to look for a 7 percent CAGR (compound annual growth rate). Clouding this pic- ture, however, is the possibility of a jobless recovery, which MacNeil believes is a distinct possibility.
He noted, for instance, that including the “marginally attached” — unemployed people who are not now actively looking for work — in unemployment reports would drive the national unemployment figure closer to 16 percent.
Despite this, I think it’s safe to say that the Great Recession is now history, and we can legitimately look forward to a real and sustained recovery. I hope that all of us can begin, again, to cope with the good problems: Managing year-on-year growth and opportunity for composites. And I hope all of us will soon be able to drop “cautious” from our cautious optimism.