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Housing, consumer sectors key to economic recovery

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By Ed Richter, Staff Writer Updated 6:34 PM Thursday, November 26, 2009

The nation is in a “jobless recovery that is not conducive in getting back to the good times,” LCNB Bank chairman and CEO Steve Wilson said.

While national media reports have reported positive news that the recession is over and the national economy is moving again, Wilson said that may not be quite the case. In the technical definition, the recession is over, but Wilson pointed out the economy is “in unprecedented times.”

Wilson, chairman-elect of the American Bankers Association, shared his thoughts with about 175 leaders in the county at the Warren County Area Progress Council’s 26th annual Economic Outlook Breakfast held Tuesday, Nov. 24 at the Kings Island Resort and Conference Center in Mason.

The recession is deep and wide and that unemployment is a serious problem that will be getting worse before it gets better, Wilson said.

Wilson also believes the loan delinquency rate remains a problem as will the removal of funding from the federal stimulus program when it ends. He is also concerned about the lack of the consumer in the game as they are not spending as much as they used to before the recession.

“We have to work through the housing problem,” he said.

In the region, Wilson said Ohio and Michigan have been among the hardest hit because of their unique problems of being tied to the auto industry and manufacturing sectors. This has also caused a ripple effect that affects other jobs and sectors that were dependent on the larger manufacturing facilities to buy goods and services from the smaller companies, he said.

“Each job supports 3.7 people,” he said.

In the Cincinnati and Dayton areas, he said there is good growth in Warren, Butler and Clermont counties. “But we’re only moving people around and not creating jobs,” he said.

He also added there are more people in the region working at jobs that pay about one-half to one-fourth of what people used to make before becoming unemployed and taking lower paying jobs. This trend is also lowering Ohio’s per capita income rate, he said.

He said while other communities across the nation lost defense and other military jobs because of the Base Realignment and Closure Commission efforts, many of those jobs are coming to the Dayton area and to Wright Patterson Air Force Base. However, without the help from BRAC, Wilson said Dayton would have experienced a worse situation.

In the region, Wilson said Warren County has fared better than neighboring counties with a serious delinquent loan rate of less than 2.5 percent in August. Butler County’s was between 5.1 and 7.5 percent. He said the subprime penetration rate, which caused much of the nation’s economic problems, was less than 3 percent in Warren County in August 2009, which was also the same rate for Butler County.

“We do them (our customers) a favor by saying ‘no,” Wilson said when customers want to buy a $200,000 home but can really afford a $150,000 home.

Wilson raised concerns about “the unbelievable spending” by the federal government’s stimulus packages that he believes will come back with “roaring inflation.”

While he painted a less than rosy picture, Wilson said consumers are saving more, cutting down debt and are better at differentiating risk better.

“The consumer is scared because he’s seeing a neighbor without a job or a neighbor’s house in foreclosure,” he said.

Wilson said the housing market remains shaky as 13 percent of all mortgages nationwide, seven million are in delinquency status. He said one in four homes are worth less than the mortgage and 60 percent of all mortgages that have been modified have re-defaulted within six months.

He said the nation will recover and the economy will be stronger, but “the housing and consumer sectors will have to lead us out of this.”

Contact this reporter at (513) 696-4504 or erichter@coxohio.com.

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