A Growing Economy

Media reports notwithstanding, the U.S. economy, while sluggish, is not in danger of going over the fiscal cliff.

That’s according to a couple of insurance industry executives, who say that private sector job hiring is up, the housing industry is slowly improving and manufacturing is making a comeback in the United States.

“I think some of the numbers show that particularly for the U.S. things are actually looking much better … the trends are looking better,” said Don Harrell, senior vice president, Marine, at Liberty International Underwriters, while participating in a recent webinar hosted A.M. Best and LIU.

“Economic growth will continue but it will continue modestly throughout the next year, 12 to 18 months,” Harrell said. “GDP growth is expected by the end of this year to be about 2 percent this year, as it grows, it’s going to grow next year up to about 3 percent.”

Harrell’s comments echoed those made a little over a month earlier by Insurance Information Institute President Dr. Robert P. Hartwig.

“Despite the 24/7, 365, bad news you hear from you hear on CNBC, the world is not coming to an economic end,” Hartwig said during a presentation at a conference held by the Insurance Council of Texas in July.

“Consumer spending is actually up. Business lending is actually up. … People are spending more … new home sales are actually up and prices are up. There are a lot of little things to be positive about,” Hartwig said. “Business bankruptcies are falling. The housing market, yes its weak, but again, some improvements. Inflation is very, very tame. The private sector hiring, although anemic, is still positive, which is something we couldn’t say four or five years ago.”

Manufacturing is recovering compared with the past couple of years, Harrell said. “The value of manufacturing shipments in June 2012 was up 32 percent since June 2009,” he said. That growth is a “very good indicator on how manufacturing is doing in the U.S.”

Harrell said there has been “huge growth in durable goods; primary metals are up 20 percent over the last year; manufacturing and machinery, up 11 percent, fabricated metals are up 6.5 percent. Even the non-durable goods are up. What this means is that the U.S. is manufacturing more … and exporting more than they did last year. That means the demand on U.S. products is there. That means the growth of our importers and exporters and our manufacturers is positive.”

Hartwig said that while construction has a long way to go before it gets back to what is considered a normal level of activity, the good news that the growth that is happening in construction is occurring in manufacturing and energy sectors. And, it’s occurring entirely in the private sector.

That’s good news, he said, “Because construction in manufacturing and the power business are long term investments. …You don’t build a power plant with the expectation that you’re going to run it for six months. You have the expectation that you’re going to run it for half a century at least, the same thing with manufacturing facilities. That implies hiring down the road.”