According to news reports, the United States is in recovery mode. However, if you talk to scrap metal recyclers, the economy is stuck in neutral at best.
During the Spotlight on the Economy session, held at the Insitute of Scrap Recycling Industries Inc. (ISRI) 2014 Convention & Exposition in Las Vegas, April 6-10, a trio of speakers explained while the U.S. economy and the scrap industry are still suffering from malaise.
|Pictured, from left: Ken Simonson, Dan North and Jason Schenker|
Speakers said that while the U.S. economy is growing, the growth is so slight that many feel the economy is stagnating. Growth is modest presently, and the outlook for 2015 calls for continued modest growth.
The relatively weak employment figures are in part to blame for the feeling of stagnation. The labor force participation rate is as low as it has been in decades, said Jason Schenker with Prestige Economics LLC, Austin, Texas.
With the weak economy, the U.s. Federal Reserve likely will keep a close eye on interest rates, which means that quantitative easing will continue, at least through the first half of 2014, Schenker said.
In his presentation, Dan North with Baltimore-based Euler Hermes North America, a global firm involved in trade credit insurance, said cautious optimism characterizes the economic outlook for the reminder of the year.
“The four forces which start and end the recession can help forecast the economic outlook: oil, fed policies, fear in the financial markets and housing,” North said. “Oil price shocks often contribute to recessions.”
The economy faces new headwinds in the form of higher taxes and uncertainty related to the Dodd-Frank bill, the true costs of the Affordable Care Act, he added.
North said that while the U.S. economy is growing, it has been anemic. “Businesses are doing OK, but it still feels like a bad market. Six years later, we still are 437,000 jobs short of where we were. We are still under water. Meanwhile, the unemployment rate is going down; but, if you stop looking for work, you don’t make the unemployment rate.”
The third and final speaker, Ken Simonson, with the Associated General Contractors of America (AGC), Arlington, Va., was more bullish on the economy. As an economist who focuses on the housing and construction sector, he noted that total construction should improve next year, adding that construction spending is improving.
He noted that private residential construction increased 15 percent in January 2014 compared with January 2013. Additionally, private, nonresidential construction increased 10 percent, while total construction is up 9 percent and public construction is up 2.5 percent from January 2013.
Simonson also said he saw problems with the construction industry. For one, federal and state governments have cut budgets and are not spending as much on schools and other infrastructure projects.
Also, Simonson added, the federal highway trust fund is about to run out of money. “With the depressed unemployment, there are less [tax] receipts, meaning there is less money for the government to spend on construction.”
The ISRI 2014 Convention & Exposition was April 6-10 in Las Vegas at the Mandalay Bay Resort & Casino.