PNC: “Persistent Growth” in 2012
Don't look for a gangbuster economic year in 2012, but PNC Chief Economist Stuart Hoffman is predicting "persistent growth."
"We're not in the relapse or 'double dip' camp," said Hoffman. "Our view is that the economy will grow actually a bit stronger in 2012 than it did this year."
Hoffman is looking for the US economy to create 1.5 to 1.75 million jobs in 2012, dropping the unemployment rate to as low as 8.25 percent. "We think [Pennsylvania] will grow jobs and have an unemployment rate by this time next year that will be 7.25 percent to 7.5 percent, down from about 8 percent today," said Hoffman, "and here in southwestern Pennsylvania, we think the unemployment will dip below 7 percent, maybe 6.75 percent."
Hoffman said that the energy sector and healthcare will continue to lead the way in the region in 2012.
Nationally he said that the biggest potential drags on the economy will be the faltering European economy, the threat of a U.S. government financial crisis, and uncertainty in the Middle East. Overall, Hoffman expects to see a growth rate of 3 percent in the coming year with small growth in the stock markets.
A recent survey of small business owners in Pennsylvania conducted by PNC found that 4 percent of respondents are optimistic about the local economy, while 43 percent are pessimistic. That compares to 2 percent and 65 percent respectively, when asked about the U.S. economy. Nine percent of Pennsylvania business owners plan to hire new staff in the coming months, according to the survey. That equals the percent of companies planning to reduce their workforce.
Many business owners said that they expect to increase prices in 2012. Hoffman said that will lead to a 2 percent inflation rate, which compares to the 3 percent expected to be posted in 2011. Hoffman said that stable energy prices will help keep the inflation number in check.