The good news is that the U.S. economy grew at a modest 2.8% clip in 2002, up significantly from the paltry 0.1% growth in Gross Domestic Product (GDP) the prior year. The bad news is 100,000 jobs nationally were wiped out last year, resulting in a total net job loss of about 1.7 million since the market peaked in early 2001, according to economist Tony Pierson, managing director of New York-based TimesSquare Real Estate Fund/Research. Those job-loss figures are a stark contrast to a healthy economy, Pierson says, which can create between 2 and 3 millions jobs annually.
"GDP is not growing rapidly enough to generate jobs," emphasizes Pierson, who nonetheless sees a light at the end of the economic tunnel. "The anemic job market will stay the same in the first half of the year, then we will stabilize and start to recover more in the second half of 2003 and into 2004." Pierson’s comments were made during a press luncheon at the Mortgage Bankers Association of America’s annual convention at the San Diego Convention Center, held Feb. 2-5. Pierson believes that a confluence of forces ultimately will generate jobs: fiscal stimulus, monetary policy stimulus and a weak domestic currency.
Thriving metro markets frequently generate between 40,000 and 60,000 jobs annually, according to Pierson. But only five of 112 metro markets analyzed by the economist and his staff between November 2001 and November 2002 had generated 10,000 new jobs or more. Those areas include Charlotte, N.C., Riverside, Calif., Miami, San Diego and Las Vegas. "The lack of any significant commercial construction activity is one reason the GDP figure isn’t higher," he adds. For example, office construction declined by 33% in 2002 over the previous year, according to F.W. Dodge. Warehouse construction dropped by nearly 25%.
The office sector will be the last to recover, predicts the economist, and not until businesses get serious about their space needs. "They’ll expand first into their existing stock of space, then they’ll rent new space which will bring down the vacancy rate," says Pierson.
The economist believes that some sectors of the economy blamed for the high-tech meltdown are poised for a comeback. "While it looks a bit bleak now for financial services, for technology and telecommunications, these sectors are going to pull out of it, but it probably won’t be before the end of this year," says Pierson.
Pierson is the scheduled keynote speaker during Tuesday’s afternoon’s general session. He will discuss the impact of changing demographics on the economy.