Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 17, 1992 TAG: 9203170116
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: NATURAL BRIDGE LENGTH: Medium
In "sort of a swan song," the retiring Roanoke Democrat told the last of his annual economic conferences that cutting the deficit and providing health insurance for the poor are major national problems.
Olin also agreed with two economists' predictions that the nation is starting a slow recovery from the recession.
"If we don't get the deficit down in some reasonable way, the country will be greatly at risk," he said, "and we can't stand to have 25 percent of the population" without health insurance. Voters "should be demanding attention" to these problems.
Since Bush "is not the steadiest person in the world," his backers should make sure the deficit-reduction agreement is renewed, Olin said. The agreement is for a pay-as-you-go policy and caps on defense and foreign aid spending.
What's needed, he said, is a cap on federal entitlement programs.
The congressman said he sees many more lobbyists for programs than for a balanced budget. He supports Bush in his promise to veto legislation that would shift funds from deficit reduction to spending.
Olin said the economy is worse than it ought to be in the district but there is no crisis and it is better than in some parts of the country.
Alfred Broaddus, research director and senior vice president of the Federal Reserve Bank of Richmond, gave the conference an optimistic report. A consensus of about 50 forecasts projects annual economic growth at 2 1/2 percent in the second quarter, 3\ percent in the last half of the year, he said. He expects domestic growth "will level out" at 3 percent next year.
Lower interest rates and refinancing of mortgages should free more money for consumer spending, Broaddus said in a luncheon talk. Credit is more available than it has been for a long time.
If the consensus prediction misses the mark, he said, it will more likely underestimate growth. Banks and construction people are much more optimistic and some are seeing strength in housing and employment growth, Broaddus added.
Inflation will stay low in the first year of recovery, he predicted, but upward pressures will come in the second and third years as they have in other economic cycles.
Many job losses are permanent, Broaddus said, but much of corporate restructuring "is healthy and beneficial." The nation's savings rate is too low at 4 percent, he said. It should be 6 1/2 percent to 7 percent of total income.
The Roanoke Valley is becoming more of a job center than a population center, according to J. Allen Layman, president of Botetourt Communications Inc., the parent of Roanoke & Botetourt Telephone Co.
Layman, one of four regional speakers, spoke of "improving corporate and consumer balace sheets" in the valley.
His company is one of five partners in a 500-mile fiber optics system from Johnson City, Tenn. to Harrisburg, Pa. Technology is available, Layman said, for two-way, interactive television, a benefit to education and economic development in rural Virginia.
Loretta Reeves, executive director of Greater Alleghany Economic Development Commission, spoke of the need for regional cooperation among governments. "It seems that trust does not exist," she said, "but we have got to work together."
Economic activity in Alleghany County has quadrupled since completion of a 75,000-square-foot shell building, she said. Several prospects have been close to taking the building, she said.
Her area is not as hard hit as some, she said, but unemployment remains high and Covington has been recognized as the city with the highest population decline in the state.
Jeff Downin, executive vice president of the Greater Lynchburg Chamber of Commerce, said his area has had layoffs, store openings and closings "and we've been touched by the recession, but the regional economy has "been going up steadily."
Unemployment has fluctuated in the Staunton-Waynesboro-Harrisonburg area and it could get worse even if the economy picks up, according to William Strider, executive director of the Central Shenandoah Planning District Commission. The dairy industry was hit by a 25 percent milk price cut last year but the poultry industry is expanding, he said.
Bill Wood, a James Madison University economist and the keynote speaker, said the recession is ending "but we have to climb back up." Economics teaches that both good and bad times never last, he added.
Overall, Wood said, the 6th District is taking the recession better than the rest of the nation. There is real hardship but little overbuilding, he said. "We're not as hot when we're hot or as cold when we're cold."
by CNB