Regions Bank chief economist Bob Allsbrook says the outlook is good for Alabama’s economy.
In which Thicket writer Beth Wilder expands on her Business column in the premier issue, “The Future’s So Bright” regarding the state’s economic future.
Slowing, but not Stopping
Three strikes and you’re out—at least that’s how it goes in baseball. But when it comes to our economy, three strikes might not necessarily mean the batter heads back to the dugout. Bob Allsbrook, chief economist for Regions Bank, has been following economic trends in Alabama and around the country for over 20 years, and according to him, the game isn’t over. “We are definitely entering into an economic slow-down,” he says, “but probably not a full-blown recession.”
“As a nation, we have three strikes against us right now,” he explains. “First of all, our financial obligations ratio (a consumer’s required monthly payments relative to his take-home pay) is at an all-time high and has been for the last eight quarters, mainly because of the housing market. Add a second strike—rising gas prices—on top of our inability to purchase what we want, and that leads to strike three, a general malaise among consumers. We are anxious about spending and borrowing money. When all of these factors come together, the economy has to slow down.”
Is Alabama Immune?
Yet Allsbrook says, the future is not all that gloomy. “Economists will debate by the hour whether or not we are in a recession. I say no. If you want a technical label of recession put on the slow-down, the answer has to be ‘no’ because employment will hold up. You can’t have a full-blown ‘recession’ if unemployment numbers stay low, and I think they will.” Allsbrook explains that American companies want to hold on to their highly skilled workers because that is how they compete globally against foreign manufacturers. This, he does not foresee huge layoffs for those workers in the near future.
Low unemployment numbers are one reason Allsbrook feels that Alabama will weather any economic storm that blows our way. With the growing auto industry, as well as the announcement of a new ThyssenKrupp steel plant to be built near Mobile, the job market for skilled workers in this state seems better than ever. “I’ve been saying for 10 years that Alabama has the best economic story in the nation. I know that’s quite a statement, but there’s no hedging to it. We have the most impressive economic change of any state in this country.”
Allsbrook actually predicts that Alabama’s economy will grow at a faster rate than the U.S. economy during the next two years, something that has never happened. “There is nothing inherently better about Alabama than other Southern states,” he says. “Our political process finally recognized that and decided we didn’t have anything to offer other than incentives and a trained workforce. So we committed ourselves to providing that, and as a result, the outside investment has arrived. We have exceeded critical mass as far as getting enough jobs here.”
One Big Obstacle
In Allsbrook’s opinion, there is only one hurdle for future economic growth in Alabama: our educational system. “These companies want literate employees, and many of our schools are failing. There is a perception out there that is in many cases a reality. While we certainly have some great school systems around the state, we also have high school graduates who can’t read. When we try to lure outside investors, that negative image we have is always an obstacle. The image is understandable, and we have to work harder to overcome it.” According to Allsbrook, strengthening our public school system will only add to the overall good health of the Alabama economy.
Posted by Beth Wilder
Slowing, but not Stopping
Three strikes and you’re out—at least that’s how it goes in baseball. But when it comes to our economy, three strikes might not necessarily mean the batter heads back to the dugout. Bob Allsbrook, chief economist for Regions Bank, has been following economic trends in Alabama and around the country for over 20 years, and according to him, the game isn’t over. “We are definitely entering into an economic slow-down,” he says, “but probably not a full-blown recession.”
“As a nation, we have three strikes against us right now,” he explains. “First of all, our financial obligations ratio (a consumer’s required monthly payments relative to his take-home pay) is at an all-time high and has been for the last eight quarters, mainly because of the housing market. Add a second strike—rising gas prices—on top of our inability to purchase what we want, and that leads to strike three, a general malaise among consumers. We are anxious about spending and borrowing money. When all of these factors come together, the economy has to slow down.”
Is Alabama Immune?
Yet Allsbrook says, the future is not all that gloomy. “Economists will debate by the hour whether or not we are in a recession. I say no. If you want a technical label of recession put on the slow-down, the answer has to be ‘no’ because employment will hold up. You can’t have a full-blown ‘recession’ if unemployment numbers stay low, and I think they will.” Allsbrook explains that American companies want to hold on to their highly skilled workers because that is how they compete globally against foreign manufacturers. This, he does not foresee huge layoffs for those workers in the near future.
Low unemployment numbers are one reason Allsbrook feels that Alabama will weather any economic storm that blows our way. With the growing auto industry, as well as the announcement of a new ThyssenKrupp steel plant to be built near Mobile, the job market for skilled workers in this state seems better than ever. “I’ve been saying for 10 years that Alabama has the best economic story in the nation. I know that’s quite a statement, but there’s no hedging to it. We have the most impressive economic change of any state in this country.”
Allsbrook actually predicts that Alabama’s economy will grow at a faster rate than the U.S. economy during the next two years, something that has never happened. “There is nothing inherently better about Alabama than other Southern states,” he says. “Our political process finally recognized that and decided we didn’t have anything to offer other than incentives and a trained workforce. So we committed ourselves to providing that, and as a result, the outside investment has arrived. We have exceeded critical mass as far as getting enough jobs here.”
One Big Obstacle
In Allsbrook’s opinion, there is only one hurdle for future economic growth in Alabama: our educational system. “These companies want literate employees, and many of our schools are failing. There is a perception out there that is in many cases a reality. While we certainly have some great school systems around the state, we also have high school graduates who can’t read. When we try to lure outside investors, that negative image we have is always an obstacle. The image is understandable, and we have to work harder to overcome it.” According to Allsbrook, strengthening our public school system will only add to the overall good health of the Alabama economy.
Posted by Beth Wilder
at
6:16 PM
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