It’s time to start taking on some calculated risk.
That was the message offered by Jeffery Humphreys, chief economist at the University of Georgia Terry School of Business, during the Rotary Club of South Forsyth’s meeting Wednesday.
“People are still playing it way too safe for this stage in an economic recovery,” he said. “People are saving more, they’re not getting loans and they’re staying, in some cases, in jobs that they really hate. And they’re staying in those jobs for the security that they offer.
“This is the time to take on some risk if you want to benefit fully from this recovery.”
Humphreys’ stop at the Rotary meeting was part of the TeamMBA 2010 Lecture Series, offered by the North Georgia College & State University Mike Cottrell School of Business.
The school’s dean, Max Burns, said the lecture series features a variety of guest speakers, including business executives from Coca-Cola and Home Depot, as well as Humphreys.
“We’re all part of the same system,” Burns said of reaching out to another university. “He [gave] a total state of Georgia economic forecast as opposed to a regional forecast.
“He is nationally known and I think he did a very credible job with this.”
Humphreys gave a preview of the Selig Center for Economic Growth’s economic outlook.
He said a back-to-back recession doesn’t look like it’s in the cards. For investors, it is a good time to invest in the housing market, as it’s not likely to dip much further.
That was a point with which Rotarian Henry Lins agreed. The investor said the market is “getting to where housing is selling below replacement costs.”
“You sell a house, it goes on the market for $200,000, yet it cost $250,000 to build that same house,” Lin said. ‘He thinks real estate has really seen its worse and ... I’m real optimistic.
“I liked what he had to say.”
Humphreys said he’s not looking for tremendous job growth next year, though the odds of finding a job likely will improve.
Job growth may increase 1 percent, he said, but it will be the first time seeing that growth on an annual basis since 2007.
The unemployment rate could drop about a half a percentage point from 10.3 to 9.8 percent. Also, he said, wages could increase about 1.5 percent after adjusting for inflation.
The gross domestic product is going to grow faster than productivity, which Humphreys said “means that to meet that rising demand, companies are actually going to have to hire more people rather than just squeeze more of their existing workers or by investing more in capital equipment.”
The current situation, when things are just slowly starting to grow, is the time to start taking some risks, Humphreys said.
“It’s time to stop running with the herd. I think the herd right now has got it wrong. They’re too risk-averse,” he said. “Maybe dump those pricey treasuries and buy some equities. That’s what I’ve been doing.
“I’m putting my money where my mouth is. It’s been a winning strategy and I think it’s not just for this year but for the future as well.”