Financial Crisis Was a “21st Century Depression”

LOS ANGELES—The slow and steady GDP growth that we are experiencing today may be a residual effect from the financial crisis, according to Walt Kemmsies, managing director, economist and chief strategist at JLL. Kemmsies gave an economic update as the keynote speaker at NAIOP's annual I.Con event in Long Beach. During the speech he called the 2008 crisis a 21^st century depression with a longer recovery than many realize.

“Part of low GDP growth is because of the [last] recession,” said Kemmsies in his speech. “It was really a depression, but it was a 21^st century depression where we cut interest rates and extended unemployment benefits. You don't walk out of a financial crisis in six months.” He says that we really ended the recovery 18 months ago, which is why this cycle has felt so long. “We are in a low growth period, and I don't think the Fed can raise interest rates.” While the US economy is growing slowly, there is no concern over a recession. “It is difficult to see a recession in the near term,” he adds. “We don't see massive speculative excesses. We are focusing on sustaining economic growth.”

In addition to the effects from the last recession, Kemmsies says that the global economy is growing. As a result, the US may not be the world's largest economy in the next few years. “The US is the biggest fish in the pond, but the pond is getting bigger. We need to adapt,” he said, predicting that China will surpass the US in the next decade.

The major changes that Kemmsies highlighted focused on demographics and production. The population is aging, and that has effectively slowed employment growth. At the same time, the economy is focusing on services rather than products, and services are difficult to measure. “We have automated our manufacturing, and we got rid of doing consumer goods,” said Kemmsies. “The US needs to realize that it operates globally and it needs to drive exports. That is a fact, and you need to adjust your strategy to that.”

Advanced and automated manufacturing, on the other hand is thriving. “We are the most productive country in terms of advanced manufacturing,” said Kemmsies. “That industry never left. There is a productivity renaissance, but it doesn't feed a lot of people because it is all automated.”

LOS ANGELES—The slow and steady GDP growth that we are experiencing today may be a residual effect from the financial crisis, according to Walt Kemmsies, managing director, economist and chief strategist at JLL. Kemmsies gave an economic update as the keynote speaker at NAIOP's annual I.Con event in Long Beach. During the speech he called the 2008 crisis a 21^st century depression with a longer recovery than many realize.

“Part of low GDP growth is because of the [last] recession,” said Kemmsies in his speech. “It was really a depression, but it was a 21^st century depression where we cut interest rates and extended unemployment benefits. You don't walk out of a financial crisis in six months.” He says that we really ended the recovery 18 months ago, which is why this cycle has felt so long. “We are in a low growth period, and I don't think the Fed can raise interest rates.” While the US economy is growing slowly, there is no concern over a recession. “It is difficult to see a recession in the near term,” he adds. “We don't see massive speculative excesses. We are focusing on sustaining economic growth.”

In addition to the effects from the last recession, Kemmsies says that the global economy is growing. As a result, the US may not be the world's largest economy in the next few years. “The US is the biggest fish in the pond, but the pond is getting bigger. We need to adapt,” he said, predicting that China will surpass the US in the next decade.

The major changes that Kemmsies highlighted focused on demographics and production. The population is aging, and that has effectively slowed employment growth. At the same time, the economy is focusing on services rather than products, and services are difficult to measure. “We have automated our manufacturing, and we got rid of doing consumer goods,” said Kemmsies. “The US needs to realize that it operates globally and it needs to drive exports. That is a fact, and you need to adjust your strategy to that.”

Advanced and automated manufacturing, on the other hand is thriving. “We are the most productive country in terms of advanced manufacturing,” said Kemmsies. “That industry never left. There is a productivity renaissance, but it doesn't feed a lot of people because it is all automated.”