A Federal Reserve Bank economist forecast a challenging year nationally for 2009, but the Quad-Cities, so far, fares better.
Despite announced layoffs at Alcoa, John Deere and other local businesses, the local economy has avoided the worst of the national recession, said Jim Victor, senior vice president and senior portfolio manager for Smith and Barney, Davenport.
"Recoveries have always occurred in the past and they will again," he told 290 people attending the Quad-City Chamber Federation's 2009 Quad-Cities Economic Forecast at the Clarion Hotel in Davenport.
Unemployment in the Quad-Cities is lower than the national rate, Mr. Victor said. The health-care sector is growing local employment.
Housing affordability is a real positive for the community, and should be used to woo corporations and economic development, he said. Quad-Citians have choices on how they choose to save, to spend and to invest.
The U.S. economy will remain challenged through most of 2009, said William Strauss, senior economist and economic advisor for the Federal Reserve Bank of Chicago.
Employment will remain weak, while unemployment rates will rise. Nearly two million jobs were lost over the past year. The unemployment rate rose above 7 percent by the end of 2008 from 4.5 percent in 2007. Michigan and California have the worst unemployment rates in the nation at more than 9 percent.
The lack of growth in the economy will lead to lower inflation over the coming year.
The biggest risks in the national economy are the volatile credit markets and the weak housing market, although housing is a small part of the whole outlook, Mr. Strauss said.
The national economy has been in a recession for a full year after peaking in December 2007, he said. If this recession ends in April or May, it will match in degree of severity to other recessions, but will not be as severe as the Great Depression, to which it is often compared, Mr. Strauss said, adding that the last major recession was in the 1980s.
Augustana College president Steven Bahls, who is chairman of the Illinois Quad City Chamber of Commerce and board member of the Chamber Federation, said he reviewed the event with a sense of optimism that there are better days ahead.
"The Quad-Cities is not immune (to the recession) but the impact is muted," he said. "We're looking for a mid-year (national) recovery."
The Federal Reserve Bank's data will help Quad-Cities leaders prepare for the economic turnaround, said Tara Barney, president and CEO of DavenportOne. The use of technology also will lessen the negative impact for businesses and help them prepare for the recovery.