Chicago Fed economist: Things could be worse

CEDAR RAPIDS - When it comes to the state of the country's economy - it's not a bad outlook, but it's not a great one, either.

That's according to William Strauss, senior economist and economic adviser at the Federal Reserve Bank of Chicago. Strauss gave his economic outlook to a crowd of more than 60 on Friday morning during The Gazette's Business 380 Excellence Business & Breakfast at the downtown Cedar Rapids Public Library.

The country's gross domestic product expanded 2.1 percent over the past year, Strauss said - and while the good news is that the economy continues to improve, the pace of growth is only so-so.

'The fact is, we shouldn't be surprised by growth,” he said. 'We should grow. That's what our economy does and what most economies do.”

Strauss, who analyzes the Midwest economy and the manufacturing sector, said the regional economy is also growing, but at a slower rate than the country - about 1.5 percent compared with 2 percent. This is likely due to smaller populations.

'Iowa certainly has this problem,” he said. 'Illinois is losing population. But in general, historically, it's been a challenge to keep populations in colder, more northern states.”

The housing sector is steadily improving but likely won't return to 'normal” until 2017 or even 2018. According to Blue Chip Economic Indicators, economists forecast 1.3 million new housing starts for 2017, Strauss said. But a normal market is between 1.4 million and 1.5 million starts.

'We have been well below that since before the housing crisis began,” he added.

He also pointed to employment statistics, including the number of jobs created and falling unemployment rates that indicate the economy is steadily returning to 'normal.”

Even still, these 14 million news jobs added since the Great Recession - including about 2.4 million in the past 12 months - are not adding to economy, he said, as about 7.8 million workers lost jobs during the 2007-2009 recession.

What's more, despite the 4.9 percent unemployment rate - which Strauss called impressively low - he said the share of those who are unemployed for more than six months is significantly high.

'Here we are in the eighth year of an expansion, and the number still remains over 25 percent,” he said. 'So a quarter of those people who make up the 4.9 percent have been unemployed for more than 6 months.”