MARTINSBURG, W.Va. — Economist Andy Bauer painted an optimistic portrait of the economy during recent talks in West Virginia.
Bauer is a senior regional economist at the Baltimore branch of the Federal Reserve Bank of Richmond. The Oct. 10 sessions, sponsored by CNB Bank, were in Berkeley Springs, W.Va., and Martinsburg, W.Va.
In general, Bauer said he’s optimistic about the economy of the nation and the Crossroads region. He pointed to several strengths, including the area’s key position for distribution centers and the investment of large companies, like the Procter & Gamble Co. facility.
“We have nice, balanced growth, which we haven’t had for a number of years,” he said.
Part of his remarks in Martinsburg dealt with the changes from the baby boom to the millennial generations.
For years, the nation added about 1 million households a year, and 70 percent of them were homebuyers, he said.
But from about 2009 to 2015, after the Great Recession, the figure dropped to about 500,000 households a year, and renters made up all of the net increase.
“You have to ask yourself, where are all those people?”
Some of them, he said, are avoiding large purchases and debt — preferring to rent a home, for example.
He said many came of age and joined the workforce at the end of the Great Recession, the housing market crash and the slow recovery.
“They don’t want to own anything except for this,” he joked, pulling his cellphone from his pocket.
Still, he predicted that the numbers will begin to turn more toward the 70/30 split of homeowners to renters.
“Surveys say the millennials want to own a home,” he said.
Mortgage interest rates will eventually begin to rise, he added. That might prompt some to stop waiting and take advantage of rates that are still low.
Some other highlights of Bauer’s remarks:
• Because of changes in technology and specialization, wage increases have been spread unevenly. “You’re seeing a lot of different jobs being created at the high end and the low end,” he said.
• Changes in the workplace also mean new demands on and opportunities for workers. For example, he said one manufacturer told him 89 percent of the equipment in the factory is either a computer or run by a computer. That, in turn, puts different demands on schools to make sure people are prepared for the workplace.
• Technicians and tradespeople are still needed, and many earn good wages. “Not everyone has to go to college,” he said.
• Responding to questions about the national debt, he said it’s hard to say when the debt load will weigh too heavily on the nation’s economy. “This is not a new thing,” he said. “The budget outlook’s been what it’s been for decades.” While declining to talk about political matters, he said organizations such as the Congressional Budget Office have said the debt is not sustainable long-term. “Something’s going to have to be done in the future,” he said.
• The 12 Federal Reserve Banks are private entities. “I actually don’t work for the government,” he said.