A global business consultant says cautious optimism is his bottom line for 2013.
Dr. Jay Bryson spoke for 20 minutes Tuesday afternoon to 650 Lehigh Valley business and political leaders gathered at the Artsquest Center at SteelStacks in Bethlehem for the presentation of the Community Development Awards.
Bryson said he expects 2013 to be "a halfway decent year" for business.
He said he was encouraged that the economy has added about five million jobs since February 2010, but noted that 9 million jobs were lost during the Great Recession, "so we're only about halfway back."
Consumer purchasing power rises and falls on the costs of energy, Bryson said, adding that purchasing power has increased two percent in each of the last two years, which is still less than the three percent a year before the recession.
Bryson said households have pared their debt, and that people are only borrowing to buy cars or go back to school. Of the latter, he said, "People are trying to re-tool themselves so they can work."
However, homeowners "still have holes in their balance sheets," Bryson said. Housing prices have stabilized over the last three years, after dropping dramatically, "but they still haven't really come back."
While Bryson said he expects business investment to be weak in the first half of 2013, "but it could pick up by the end of the year, going into 2014."
Bryson predicted Congress will trim the budget, and that could eventually boost the economy, "unless they do something stupid, like default on the debt, or wack federal spending by 20 percent."
He said he expects the Fed to keep interest rates low for at least the next two years. "Unemployment would have to get down to 6.5 percent before they would even think about raising rates," Bryson said.
The only way the rates would rise is if the economy grew 5 to 6 percent; if there was an inflation scare, or if foreign countries would dump U.S. Treasury securities, Bryson said. The latter, which would cause a "global panic," is unlikely, Bryson added, "unless we don't pay our debts."
Summing up, Bryson urged businesses to "exercise diligence and stress test assumptions" before investing.
Kamran Afshar, president of KAA, discussed a poll of area businesses about their hiring and equipment purchasing plans that was done in conjunction with the Lehigh Valley Chamber of Commerce. He said the results show that business growth "has been going sideways for a year" in the Lehigh Valley.
Ashfar said respondents to the poll were generally more optimistic about their future hiring and expansion plans, even if they didn't pan out. "Almost always, the forecast is a little higher than what they end up doing," he pointed out.
Still, he said he expects businesses to add on average about one-half an employee to their work forces and spend about one-half of one percent more in the coming months.
Japanese pharmaceutical company Daiichi Sankyo and Creditsafe, which offers on-line company credit reports, were the 2013 Community Development Award winners.
Daiichi Sankyo established a manufacturing and packaging operation in Bethlehem, creating 82 jobs, and invested $15 million to expand its facility.
Creditsafe, which opened its new U.S. headquarters in Allentown in September 2012, now employs 50 people and anticipates expanding to 250 over the next five years.
The borough of Bangor, Northampton Co., was honored with the Exemplary Borough Business Revitalization Project for its Heritage Mural, which preserves the heritage of the historic district, highlights local art and artists, and provides educational opportunity for the community.