Forecast: Economy to rebound this year

By Don Shilling

BOARDMAN — Look for the economy to start to rebound in the second half of this year, a Federal Reserve official told Regional Chamber members.

Mark Sniderman, executive vice president and chief policy officer for the Federal Reserve Bank in Cleveland, said Friday that he sees five factors that are working to improve the economy. He spoke at the chamber’s annual economic forecast breakfast at Mr. Anthony’s in Boardman.

First, several policies are working to put more money into the economy, including expected tax cuts, a stimulus package from Congress and expanded credit being offered by the Fed.

Second, businesses should need to build up their inventories later in the year. Sniderman said businesses are enacting “an extreme inventory liquidation” now, but that can last only so long.

When the liquidation ends, an increase in orders will get factories working again, he said.

Third, he thinks the housing sector will start to improve because of lower mortgage rates. Eventually, the inventory of unsold homes will be thinned and that will spur home construction, he said.

Fourth, he said he has faith in the entrepreneurial spirit of Americans. He said he thinks that long-delayed business ventures will get off the ground even though the recession is lingering.

He noted that three solid businesses were started by bold entrepreneurs during the recession of 1972-74 — FedEx Corp., Microsoft and Southwest Airlines.

“If you don’t take advantage of an opportunity, someone else will,” he said.

Finally, he said he thinks private capital will become more available for investments in the second half of this year.

The chamber also presented a wrap-up of its five-year economic development program, Pride in Progress.

From 2004-08, chamber officials assisted in 100 projects which created 6,400 jobs and led to $960 million in investment in facilities and equipment.

The chamber is raising money for a new economic development effort called Project 360.

shilling@vindy.com