Travelers along the road to national and local economic recovery have passed a few milestones on the route, a certified financial planner told a business crowd in east Vancouver on Friday.
But uncertainty is still around the corner, said Chris Butler, a senior vice president and trust director of Riverview Asset Management Corp., a division of Riverview Community Bank. Butler addressed about 50 members and guests of the East Vancouver Business Association during its monthly breakfast meeting, held at Riverview’s east Vancouver branch on Northeast 162nd Avenue.
Butler highlighted as encouraging developments the nation’s improving jobs market, a local increase in home sales, a prolonged low-interest-rate climate and President Barack Obama’s nomination of Janet Yellen to head the Federal Reserve. But Butler, an avid motorcyclist, also likened the year-end economy to a road bike about to turn a potentially treacherous corner. Staying too far to the left, he said, puts the motorcycle in the path of oncoming traffic, while the gravelly area on the right-side shoulder is equally dangerous.
“We’ve been going around a dangerous corner for five years,” Butler said.
He does not expect the nation’s economic policy to change drastically when Ben Bernanke, one of the most influential Fed chairmen in history, steps down at the end of his second term on Jan. 31. Butler expects Bernanke’s nominated replacement, Yellen, to maintain the status quo.
“Mr. Bernanke is on his way out, and Yellen will most likely remain dovish,” Butler said.
The incoming Fed chair is expected to keep interest rates low until 2015, he said.
Butler also expressed encouragement in national employment numbers, citing Department of Labor figures released this week that showed 204,000 jobs were added in October, holding the national unemployment rate steady at 7.3 percent. However, Butler said about 200,000 new jobs per month would be needed just to provide jobs for graduates entering the workforce.
“It’s a start, but barely enough to put the new workforce to work, let alone provide jobs for those who are out of work,” he said.
He predicted the trickle of employment growth will lead to exponential hiring across the nation in the long run and could improve the job market in Clark County over time. But the trend won’t necessarily sustain improving home sales across the county or help its residents enter the market in the short term, due to rising home prices and hits to household incomes, Butler said.
With continued population growth, Butler does not foresee the county’s tight supply of houses listed for sale keeping up with increasing demand. That could continue to push home prices out of reach for many, he said.
Butler added that personal incomes throughout Clark County shrunk to an average of $30,000 in 2012, down from an average of $33,000.
“That’s not something we like to see,” he said.
Butler said Clark County employers haven’t been adding jobs fast enough to hasten the recovery. Butler said it would take 6,000 new jobs for the county’s unemployment rate — which he said stood at 8.3 percent in August — to shrink to its historical average low of about 5 percent.