Expert is bullish on the economy
It may be doing so slowly, but the economy is picking up, says Claude Lilly, chairman of the Charlotte Branch of the Richmond Federal Reserve Bank and dean of Clemson University’s College of Business & Behavioral Science.
By virtue of Clemson alumni connections, Lilly was a dinner guest Tuesday at the La Cañada Flintridge home of Alan Cade, owner of the L.A.-based construction project management firm DACM.
In South Carolina, Lilly lives next door to businessman Larry Sloan, who at Clemson was a fraternity brother and member of the Tigers Marching Band with Cade. As part of a Cade-Sloan reunion, Lilly came along to hear about the economics of construction management from Cade, whose firm has been involved in the seismic retrofit of Los Angeles City Hall and dozens of other large development projects.
As a member of the Charlotte board, Lilly helps advise the Richmond Federal Reserve Bank — one of 12 banks in the Federal Reserve System — about economic conditions in the region and possible means for stimulating growth.
The Valley Sun was invited to speak with Lilly during his visit.
While emphatic that his opinions aren’t to be construed as official statements of the Federal Reserve, Lilly expressed cautious optimism about returning consumer confidence while warning of possible permanent lifestyle changes ahead for the baby boomer generation.
Valley Sun: What have you observed about the economy in Southern California?
Claude Lilly: I think I see the economy turning around. This economy is going to take four or five years to recover, but we’ve started up. The Federal Reserve has used a number of very strategic moves to support the economy — keeping interest rates down, buying back bonds to put money out into the marketplace. But at this point, the consumers are the critical factor. If the consumers start to spend, this economy will get better.
VS: Essentially, people have to believe things are better for them to actually get better?
CL: Once they get a comfort level — whether it’s feeling like their jobs are going to be safe and housing values are not going to drop a lot more — then we’ll see the turn. I see people at the higher end of the socio-economic level spending— they see bargains out there, and they’re holding cash. I’m not convinced that the average citizen is really convinced yet that we’re going to turn around, but I think they’re getting there. They’re seeing people buy cars and that people are beginning to take vacations again. We’re returning to some normalcy that we didn’t have a couple of years ago.
VS: But you fall off the ladder a lot more quickly than you climb back up.
CL: When the economy started [going] down, people thought this was a typical recession, down for 18 months and then back up. That didn’t happen, and so the psyche took a hit.
VS: A lot of young people have never seen a typical recession. Does that leave a greater effect on them?
CL: I’m a baby boomer, and I’m convinced baby boomers have taken a hit that they may not get over. I think you’re going to see them downsizing. You would naturally do that when you turn 65, but I think baby boomers have a different environment than they’ve been used to that last 35 years. Younger people can say, ‘It’s bad, but I’m 30. I’ve got 35 years to recover.’ But if you’re 62, you don’t have a lot of time to recover.