Battered economy moving forward on slow rebound in 2012, some experts say

Housing market, jobs recovery remain objects of little, definite confidence
By: Gus Thomson, Journal Staff Writer
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AUBURN CA - Signs point to a slow recovery for the economy, some Placer County financial experts are saying as 2012 gets off to a promising start. That could bode well for the local and regional economies – but not to the same degree as previous rebounds. And one local business leader is calling for some political changes in Washington to provide a boost to the nation’s economic fortunes. Richard Barber, managing director of Auburn’s Barber-Kenes Capital Management Group of Wells Fargo Advisors, said Wednesday that the economy is in recovery mode from the Great Recession but the move to potentially better times ahead is different than previous recoveries. “Normally, the economy rebounds rapidly after a steep contraction,” Barber said. “The current recovery has been relatively slow because of lingering problems.” Barber noted that the once-buoyant regional and national housing market continues to be depressed – even at a time of record-low mortgage rates. In the workplace, employers have been increasing profits but slow to add workers, Barber said. “Businesses, especially small businesses, which account for most of the job creation, are still uncertain about healthcare costs and their tax situation,” he added. “They’ve been reluctant to hire back workers let go in the recession.” Brian Mishler, Auburn Edward Jones financial advisor, said he can’t predict the future twists and turns of the economy but he’s moving forward on the premise that there will be modest economic growth in the coming year. That could mean no improvement in the housing market and an unemployment rate across the nation of between 8 and 9 percent. “Eight or nine percent is the new norm (in the unemployment rate) and we kind of need to get used to it,” Mishler said. Inflation likely to lower Inflation is likely to be a little lower in 2012 than it was in 2011. “As a result, long-bonds and other long-term interest rates will stay where they are in the next year,” Mishler said. Mishler said the key for investors in the new year is to properly diversify. “That doesn’t mean diversification for the sake of diversification,” he said. “It’s more the need to move between investment types in a timely and efficient manner.” Barber, a long-time investment advisor in Auburn, said that Wells Fargo is predicting an annual growth rate in the Gross Domestic Product of 2.2 percent, versus 2.7 percent over the past 30 years. Inflation is anticipated to drop marginally from a 2.8 percent increase over 2011 to 2.5 percent nationally, Barber said. It was 1.6 percent in 2010. “The problem is that even though the economy is growing, it’s not fast enough to create new jobs,” Barber said. “As far as we can see, we expect better days as a result of continuing slow improvement in the economy but not a robust economy by any means.” Business leader weighs in A business owner with his pulse on the region, Tom Dwelle of Auburn-based Flyers Energy (formerly Nella Oil) said that a change at the top in Washington, D.C. this election year would be a good step toward righting the nation’s economic problems. “We’ve got to get rid of our president or it could really get bad,” Dwelle said. “We’re hearing things have turned around but jobs are still going away and people aren’t hiring.” Flyers is moving toward the purchase of a Southern California fuel business, which brings the promise of local job creation and increased sales-tax revenue for the city of Auburn. Dwelle, a partner in the family owned Flyers – the largest commercial fueling network in the nation – said that his business is doing more with less. “It’s survival time,” Dwelle said. “Things are going good but not great. We’re fighting as hard as we can but we can’t back off. Anyone who has a job here is very, very grateful.”