The Mobile, Alabama economy is performing at the level of the last quarter of 2005 according to Dr. Don Epley of the University of South Alabama. But according to Epley, the economic impact of Austal’s $5 billion Navy contract will be huge.
Epley projects that the Austel contract will create a total of 5,454 new jobs in Mobile County alone, including the 1,800 direct jobs at Austal. “This translates into a new local payroll of $179 million,” says Epley. “This is going to have a big impact on a small market like Mobile. These are Houston, Dallas, Seattle size numbers.”
Epley says a study by the National Association of Realtors showed that for every two new jobs created in a local economy, one house would be sold. “This Austal contract has the potential,” he said “to wipe out the inventory of homes in the Mobile market. Prices will go up.”
On the national level, Dr. David Altig, Director of Research for the Federal Reserve Bank, told this author that he expects the U.S. economy to expand this year at a rate slightly above 3 percent. “But we lost 8 million jobs in the recession, and those are not coming back quickly,” he said. “We’ve regained one million of those jobs, but it’s going to take three years to get the rest of them back.”
Dr. Samuel Addy, Director of the Center for Business and Economic Research at the University of Alabama, cautioned that the federal debt was becoming a concern of economists. Expressed as a percentage of Gross Domestic Product (GDP), the annual deficit averaged 2.6 percent during the period from 1980 through 2008. In 2009, the deficit was 8.7 percent of GDP.
Dr. Addy said the debt can be paid off over a set time period “by first eliminating the deficit, then paying debt using an optimal, sustainable, equitable strategy.”
Unexpressed by Dr. Addy was the question of whether our leaders have the guts to stick to a repayment plan.