The loss of jobs in the U.S. economy is a clear warning of problems ahead, Daniel C. North, chief economist of Euler Hermes ACI, told GlobalAtlanta in a video interview.
But he sees a turnaround by the end of the year or early next year.
“Employers don’t want to lay off people until they really have to,” he said at the company’s U.S. headquarters in Owings Mills, Md.
The Labor Department’s announcement in March of the biggest drop during one month in the past five years was “the final nail in the coffin” from Mr. North’s perspective.
He has been warning of the recession for months and now that it appears to be here, he is beginning to call for some improvement by the end of the year or early next year.
While critical of the Federal Reserve Bank’s delay in addressing the economy’s problems, he said that its recent actions would be felt following a lag of six to nine months.
It’s Mr. North’s job to track business cycles on behalf of the firm’s clients. With 6,000 employees in 51 countries, Euler Hermes is a prominent credit insurance provider.
It offers services for the management of business-to-business trade receivables including bonding, guarantees and collections.
Euler Hermes is a member of the Allianz Group, the German financial firm that is one of the largest corporations in the world, and its client base includes many small- to medium-sized firms.
Financial officers of such firms in Georgia and throughout the Southeast can protect their overseas business by anticipating the health of foreign firms that they are doing business with, he said.
A sponsor of GlobalAtlanta, Euler Hermes protects and insures more than $150 million in U.S. trade transactions annually.
Through its worldwide market intelligence, Euler Hermes can protect its clients from the danger of dealing with potentially bankrupt firms.
“If the companies are shipping goods on open account and they are not getting paid back as fast as they should, this is a precursor of bankruptcy,” Mr. North said. “By getting information ahead of time, the financial officers can get a feel for (a possible) bankruptcy … We want to protect them before they can be in trouble.”
Mr. North said that the economic downturn in the U.S. will unavoidably have some effect on the global economy because it represents at least one fourth of the world’s gross domestic product.
Despite this setback, he is positive about global growth and particularly favorable about the prospects for Mexico and Latin America more generally.
He also thinks that the falling U.S. dollar will benefit exporters and help attract foreign direct investment, which he supports.
Mr. North said that he was positive about investment from sovereign funds owned by foreign governments. “We need investment from somewhere, and they have every interest to see us succeed. It’s a very positive thing.”