 "Photo: Photo courtesy of UNC Charlotte Public Relations")
Tuesday Sept. 22, UNC Charlotte hosted “Moving Forward in the New Economy” in conjunction with the Federal Reserve Bank of Richmond Va. The event, held at the Harris Alumni Center, featured Dr. Joseph Mazzola, the dean of the Belk College of Business at UNC Charlotte, Dr. Matt Martin, the senior vice president of the Federal Reserve Bank of Richmond and professors of economics and finance, Dr. John Connaughton and Dr. Judson Russell. The forum focused on how the economy has changed since the recent economic depression.
“To call this a painful year is a gross understatement,” said Russell.
“You can’t hedge this in any way, shape, or form it’s been longer and more severe than 1982,” said Connaughton. “The recession is over, it has been for a couple of months… the bad news is this is the dreaded jobless recovery,” focusing much of his attention on worrying unemployment statistics that have remained high even as the economy has stabilized. Connaughton told the audience that unemployment in North Carolina has reached as high as 10.8 percent in August. “It has been a young person, blue collar, old timey recession, but not necessarily and old timey recovery,” said Connaughton.
North Carolina experienced six successive quarters of decline in GDP in the year and a half before the economy began to heal. But the assessment was far from negative. Connaughton looked optimistic about American GDP, “The stimulus package has really helped third and fourth quarter GDP.” According to Connaughton in the last year there has been a decrease in the trade deficit of $329 billion but warned of a national debt projected to increase from $11 trillion to $18 trillion in the next ten years.
Russell put these figures into perspective as Bank of America, City Group and JP Morgan Chase have $6 trillion in assets, “More than the GDP of any nation, save the United States.”
One of the biggest concerns facing economists with our recovery was how volatile it might be. Would we be headed for a ‘W’ shaped recovery as we were in the depression of the 1980s? Connaughton put those fears to rest, “We don’t think there’s a W here. The government is too invested in this economy.
Russell called it an “Obtuse recovery,” with a sharp economic decline and a slow and steady recovery. Even so, Russell claimed that Bank of America still made $7 billion dollars in profit this year.
“Healthcare is demanding the brain cell count on Capital Hill,” said Russell, alluding to the movement away from fiscal focus that congress had just a few months ago. “We have some chance to change things but I think it’s being glossed over.”
One of the biggest changes for students after the recession will be the implementation of consumer protection laws and agencies to prevent financial organizations from misleading individuals.
According to Joan Graton, assistant vice president of supervision and regulation, the proposed Consumer Financial Protection Agency -while regulating mortgage lending- would also prevent credit card companies from preying on youth under the age of 21 and misleading consumers in their advertisements. In February credit card companies will no longer be allowed to issue credit cards to individuals under 21 without written consent from their parents. Credit card companies increase interest rates without 45 days written notice to their customers. Customers may then cancel their credit cards and pay off any of their debts at the original interest rate without incurring any penalty.
Congress is also considering limiting the implementation of overdraft fees by giving individuals the opportunity to choose whether they want to go overdrawn on their accounts or simply have their purchases declined by their banks.
The Consumer Financial Protection Agency has many critics claiming that if all consumer watchdog agencies are consolidated into one agency the transition may not be so smooth. The most popular criticism appears to be that regulation of financial products will stifle innovation in the financial market. Critics also argue that one large agency may take too long to make decisions because of vast bureaucracy or that their systems may not work well together.
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