We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
Home » Leading economist sees solid growth in first half; tailing off in second half
newsworthy

Leading economist sees solid growth in first half; tailing off in second half

January 21, 2010
Mark B. Solomon
No Comments

The U.S. economy will enjoy solid growth through the first half of 2010, but growth will slow appreciably in the second half of the year once inventory levels have been rebuilt and the impact of government stimulus programs ebbs, one of the world's leading economists said Jan. 20.

Donald Ratajczak, who today serves as a consulting economist but for 27 years was director of the Economic Forecasting Center at Georgia State University, predicted that the economy grew by 4.2 percent in the fourth quarter of 2009, and will show growth of 3.5 percent and 3.1 percent, respectively, in the first and second quarters of 2010. However, he sees growth slowing to just 1.1 percent in the third quarter and 3.25 percent in the fourth quarter. All told, he sees growth in 2010 of about 2.5 percent.

Ratajczak expects brighter days in 2011 as the economy gains a firmer footing and an upcycle boosts buying, ordering, and shipping. "2011 is when you want to feel good," he told the SMC³ winter meeting in Atlanta.

Ratajczak said the economy went through near-unprecedented inventory liquidation in 2009 as the financial crisis led to a massive drop in orders and businesses that couldn't secure short-term financing after credit markets froze began dumping existing stock. In the second and third quarters alone, U.S. businesses liquidated $305 billion worth of inventories, he said.

The economy will benefit in the near term as inventories are replenished from unsustainable levels, Ratajczak said. However, that process will play itself out by mid-summer. Meanwhile, the economy remains on "life support," he said, and will not regain its health until the private sector begins creating jobs and growth is powered by wage gains rather than by government stimulus. He said that since the recovery began in July 2009, there have been only two months—July and November—in which growth has been fueled by private sector wage gains.

Ratajczak also noted that industrial capacity declined in 2009 for the first time since the depth of the Great Depression in 1932. He added that industrial capacity continues to erode and may not bottom out until the second half of 2010. In addition, commercial and industrial loans are declining by $20 billion a month, a sign that lending activity remains weak, he said.

What capital spending does occur will be in equipment and software, not in facilities such as warehouses, which Ratajczak said are already in oversupply. Facility values "have not yet bottomed," he said.

Consumers, whose spending powers 70 percent of economic growth, will not be of much help as they are more concerned with paying down debt and rebuilding their savings than going on buying sprees with their credit cards, he added.

"For the first time in my memory, the consumer is seeing debt reduction as a goal," Ratajczak said.

On the positive side, U.S. companies have boosted their cash flow by an astounding $250 billion since the recession took hold, meaning they have capital ready to deploy should they see an economic recovery take hold, Ratajczak said. He also expects a tailwind from benign oil prices, which will remain low due to a glut of oil and refinery capacity.

"I will not be surprised to see $65-a-barrel oil," he said. "I would be surprised to see $85-a-barrel oil." Oil prices closed Jan. 20 at $77.62 a barrel.

Ratajczak also expects the economy to create about 1 million more jobs by June than it has today. However, much of that job creation may come from 800,000 temporary jobs to support the taking of the 2010 census, he added.

Supply Chain Services
KEYWORDS SMC<sup>3</sup>
  • Related Articles

    Ridg-U-Rak sees strong rack growth in second half of 2016

    GlobalTranz Announces Continued Growth in First Half of 2019

    Blue Ridge Experiences Record Growth in the First Half of 2017, Led by New Customer Acquisition

Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

Recent Articles by Mark Solomon

Coming together for road safety: interview with Joshua Girard

Off the rails

Freight rate spikes shaking up the C-suite

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Schneider welcomes first battery-electric truck

  • Fred Smith is not worried about Amazon

  • RJW LOGISTICS GROUP EXPANDS RETAIL LOGISTICS OPERATION TO DALLAS

  • Maersk deploys indoor drones for warehouse inventory counts

  • Outlook 2023: What’s in store for logistics/supply chain?

Now Playing on DCV-TV

5afe63a5 7125 4318 b851 1e5738df1c91

Patterson Fan Co. | HVLS V-Series Ceiling Fan | Staging Area Air Movement

DCV-TV 4: Viewer Contributed
The Patterson V-Series is a high-volume, low-speed industrial ceiling fan that is designed to circulate a lot of air at a very low speed. These fans, ranging in diameters of 8’ all the way to 24’, are perfect for large, open spaces such as staging and shipping areas. One 24’ fan can generate a cooling effect of 6 –...

FEATURED WHITE PAPERS

  • The five best applications for robotic lift trucks in warehouse environments

  • Fulfillment Facility Improved Efficiencies by 4x

  • 3PLs: Complete Orders Faster with Flexible Automation

  • Reusable Packaging for the New Wave of Supply Chain Automation

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing