The nation is currently sitting in the late cycle of economic expansion, on the brink of a recession, according to Peter Ricchiuti, author and professor at Tulane University’s A.B. Freeman School of Business, but whether it arrives in two months or two years is unclear.
Speaking today to the Baton Rouge Rotary Club, he fired back against those who believe the current economic cycle is unique, saying having low interest rates and low unemployment while the national debt continues to grow is unsustainable.
“‘This time it’s different’—those are the four most dangerous words in finance,” Ricchiuti says.
The low unemployment rate is a lagging indicator, he says, and job skills of workers are currently mismatched with the geographic areas with the highest demand for them. While manufacturing in the country is at an all-time high, process efficiencies and the increasing implementation of automation in plants have caused 87% of manufacturing job losses.
“We have to retool a large number of workers,” Ricchiuti says. “The government and corporations are going to be the ones who have to do it, and it’s going to cost money.”
Louisiana is especially at risk for more hurt, not just because of its struggling oil economy, but also due to the trade wars’ effect on the state because of its role in transporting goods. In the future, the Capital Region will need to focus more on its chemical industry as shale gas in west Texas becomes more popular.
“I don’t see the light at the end of the tunnel here,” he says, adding that while bad for the state’s economy, lower prices at gas pumps are ultimately good news for retailers, manufacturers and other businesses, such as airlines.