In town to meet with community groups and bank clients, Jeffrey Korzenik also sat down with The Blade for an interview on the economic recovery, the market implications of the election, and what he sees as bright spots for the future.
Though Mr. Korzenik said there are many worries about the recovery’s pace, research from Fifth Third shows it’s typical of the type of recession the United States most recently weathered.
“You get this kind of limping recovery when you go through that kind of recession,” he said.
Though Wall Street may long for a far more robust recovery, Mr. Korzenik said history shows what’s happening is normal.
“We’ve [used] research libraries, historical museums, newspaper archives, 19th-century economic texts to try to piece together data that has allowed us to have this view,” he said. “And it’s actually a pretty hopeful view.”
Mr. Korzenik views the healing period as about half complete, though he said stunted growth is likely to continue.
However, he takes a more positive view on housing starting in the second half of next year and gaining momentum in 2014.
“Housing is clearly making a comeback,” he said. “We’ve, I think, forgotten just how important housing can be to economic growth.”
Inventories have returned to more normal levels, and the so-called millennials are coming to the age where they’re starting their own families and beginning to buy homes. Mr. Korzenik said the recession delayed that trend, but now that employment levels among the 25-to-30 age group have improved, he expects the start of a 10-year wave of buying activity. Those buyers tend to purchase less expensive starter homes, but the action reverberates through the housing market.
“If the lower-end house that was sitting on the market can now be sold, the sellers of that might be moving up to the next level of house, so there’s a chain impact that’s very positive,” he said.
Though there may be a lag in Toledo and the Midwest in general, the trend will be noticeable here, he said.
Where Toledo is better positioned as a leader than a follower is in manufacturing, which Mr. Korzenik said is coming back.
“Manufacturing, all those jobs that had been outsourced, all that production that had been outsourced to China and other cheap providers, we’re seeing multinationals are realizing that labor rates have gone up substantially in overseas markets while they have not gone up here. Meanwhile, here, you have much more flexible labor forces,” he said.
Going hand-in-hand with that is the continued development of cheap and accessible domestic natural gas.
“Natural-gas prices at $3 per million BTUs is potentially transformative to the U.S. economy,” he said. “That’s like buying gasoline at the pump for 75 cents to a dollar.”
Though there are environmental concerns that need to be sorted out, Mr. Korzenik said he believes natural gas has the potential to shape the next 10 years the way the Internet boom shaped the mid-1990s to the mid-2000s.
The development of gas fields might not directly help northwest Ohio, he said, but its boost to the state’s overall economy will be seen here, and Toledo’s manufacturing base provides potential opportunity for related needs.
Mr. Korzenik also said businesses and investors are likely to get more clarity after the election.
“The absolute best thing about this election season is that it will soon be over, and that’s more than just being inundated with hostile ads on TV in swing states like Ohio, but I think there is broader recognition in Washington of some of the challenges we face and some of the solutions we need to go to, but Congress is unable to surface them during an election year.”
Mr. Korzenik said he fully expects the corporate tax code — which he said since April 1 has included the highest rates in the developed world — to be addressed.
How exactly that will happen remains to be determined based on which party gains control, but Mr. Korzenik said both have solutions that will go a long way toward fixing the problems he sees.
Contact Tyrel Linkhorn at: email@example.com or 419-724-6134.