Local News Archive
Print Issue: January 2, 1992
Atlanta Economist Offers Brightening View In '92
By Thea Jarvis
Recent New Years celebrations may have been scaled down in deference to last years leaner, meaner budgets, but one prominent Atlanta economic forecaster sees both good and bad in the nations economic woes.
Arnold A. Dill, formerly senior vice-president and chief economist for C&S/Sovran Corporation, said he expects the positive to outdistance the negative as 1992 hits its stride.
It doesnt get much worse, the longtime Cathedral of Christ the King parishioner told The Georgia Bulletin in a pre-Christmas interview. Unacceptable unemployment levels, downsized corporations, reduced consumer spending and recurring national and personal debt are real, but the economy will stabilize because it is a market-based system, he believes.
This is a major restructuring of the economy, not part of a long-run decline, said Dill. Doomsayers who hint at a slump akin to a thirties-style depression are totally, completely wrong, he said. Were going through a painful period, but I dont see anything approaching a real recession or anything like a depression.
Sings of life readily apparent to the man in the street are lowered interest rates and declining inflation. Lower rates have encouraged refinancing of corporate and personal debt, Dill pointed out, freeing money for spending or saving.
The late December drop in interest rates was an effort by government to jump start the economy and will be most quickly felt by people who are carrying debt, Dill said, holders of home equity loans, variable rate mortgages and businesses who have borrowed heavily. He is hopeful that something is being done to relieve the debt-burdened economy.
The process is still ongoing, he said. At least they took a bolder move.
Inflation, he added, is at its lowest level in decades and will probably be down to three percent in 1992, meaning increased purchasing power at every level. Although the economy was flat this past quarter and may be negative in the current one, the second and third quarters of 92 should show healthy growth, which Dill expects to continue over the next few years.
Barring unpredictable events a global war, for example the economy will move forward.
Where the rubber meets the road, Dill acknowledged is in the employment arena. There is trauma in the job market. Its hitting well-to-do people along with the average wage earner. The chiefs are getting killed as well as the Indians.
On the other hand, the markets own ability to produce at a level and quality previously unimagined is a major culprit in the unemployment quagmire, he said.
Its a wonderful thing. We can do more with less, said Dill. Our capacity to produce things is growing.
The flip side is that you dont need as many people since production growth is often technology-based. Changes are coming so fast today that people are being displaced quickly.
Records were replaced by cassette tapes, and CDs are now upstaging tapes. Thats good news for the compact dics industry, but less than hopeful for the record and tape sector.
The automobile industry is building better, longer-lasting cars, so people are not buying as often.
Homes and offices are now served by a network of answering machines and voice mail, putting secretaries and traditional answering service operators at a disadvantage.
Even the medical profession gets turned around, said Dill. My kids dont have cavities compared to the mouthful he had at their age. This means there arent as many dentists needed, that the profession must change the way it cares for patients.
The market system is efficient, he observed, but its fairly cruel in the way it does that.
Dills own firm, C&S/Sovran Corporation, merged with NCNB Corporation at the close of 1991. He has taken a position in contingency planning with the new corporate entity, NationsBank, which will offer more total services with 9,000 fewer people.
Thats bad for the 9,000, but its an immense productivity increase, Dill said, acknowledging the personal stress he and fellow workers have experienced through the merger process.
To stop the market shakeout would effectively retard or put an end to legitimate economic growth, Dill feels, so a safety net of services must be in place to assist the unemployed. Though not normally an advocate of government dalliance in the free market system, he does see the need for community-wide involvement in this broad and complex problem.
Cushioning people during a wholesale economic readjustment is more a public function than a private one, said Dill, although a partnership between public and private sectors is possible.
All too often, however, companies feeling the impact of the recession have nothing left to give in the way of benefits since theyre going under, restructuring or deep in debt, he said.
Retraining workers, developing communications data and systems that assist people in finding work are areas where government might lend a hand, said Dill.
Recent cutbacks by General Motors are part of the total readjustment picture, Dill said. The possible closing of GMs Doraville plant could be a very painful situation here, he admitted, but the plant has basically been producing a package consumers do not want. Doraville produces GMs now downsized Cutlass model.
I wish there were an easier, softer way, he continued. When the market makes a comeback in cars and it will some of these people will be absorbed elsewhere. Meanwhile there is a semblance of a safety net in place for some GM workers who receive a sizable percentage of salary during a layoff and for those entitled to unemployment compensation.
On Balance, the relatively free labor markets that exist in the U.S. provide more open access to jobs, he said. The old adage that My father worked for the GM plant and so will I and so will my children is outdated and unrealistic. People today will have the opportunity to engage in different careers, possibly more than one profession in a lifetime, said Dill.
Ultimately, he expects, the solution to the sluggish economy will come from increased consumer demand and falling inflation. While government can stimulate and perhaps accelerate growth by cutting interest rates, he believes tax cuts are the wrong way to go because they only increase federal debt levels.
As a free market economist, Dill is reassured by world events proving what he perceives as the failure of manipulated national economies.
You cannot have a centrally planned economy anymore, he said, pointing with compassion to the situation in Eastern Europe. Its too complicated a world to try and plan for everything.
This new year, though the U.S. is struggling with its economic woes, Eastern Europeans are facing empty store shelves and shortages of everything from bread to shoes.
Americas problem is glut: Too much of everything, in Dills words. And while thats not something we like to be told in the post-me decade of the eighties, its much easier to get out of in the long run, Dill concluded.