By Thomas J. McKillen
Managing Editor

While a “double dip” recession won’t likely occur, the rebound of the economy will be slow, William A Priebe said July 21.
Priebe, co-founder and president of Geneva Capital Management, presented his views on the economy during a presentation at the Moraine Park Technical College West Bend Campus in a program sponsored by Economic Development/ Washington County.
Priebe presented estimates showing an increase in the growth domestic product of 2.5 percent in the third quarter this year and 2.2 percent next year.
“This is pathetic growth,” Priebe said of the real GDP. “The first year of a recovery after one of the great recessions ought to be 6 percent, and instead it’s 2.5 percent.”
Priebe indicated that a recovery is being slowed by the fear of additional government regulations affecting the private sector.
“This idea of using every crisis as a reason to micromanage the economy is going to cause a lot of damage. What it’s causing right now is the average small businessman — and I talk to many, I know people with small businesses — they say ‘I’m not adding anybody. We’ve called people back, we’ve lengthened their hours, we’ve added a little overtime.’”
Priebe indicated that business owners don’t know what how they will be affected by new regulations.
“Every single day they’re bashing business,” Priebe said of elected officials at the federal level. He noted that bankers, the oil industry, insurance firms and for-profit education organizations have been targets of barbs by elected officials.
Inflation is projected to increase by 2 percent this third quarter and 2.3 percent in 2011. Priebe said inflation won’t occur because price increases can’t be passed through to consumers.
“Right now, your job is to make your product cheaper if you’re going to increase margins,” Priebe said.
Also, profit margins are projected to increase by 26.8 percent this third quarter and 14.6 next year.
“Why? Because private business did what it normally does: It slashed costs, it closed plants, it laid people off. Cruel though it is, they are now sound, ready to move forward, loaded with cash, but reluctant to spend.”
With the federal government facing large deficits and entitlement spending beyond this year, Priebe indicated there are “difficult choices” ahead. Bringing in fiscal restraints would lead to lower spending and increases in taxes but the housing market wouldn’t recover and business spending would be restrained. An expansive monetary policy would lead to higher inflation and a “boom/bust scenario” along with a weakening US dollar.
“In any case, it looks like we’re going to have slow growth for awhile. I don’t know how we get out of the box now,” Priebe said.
Priebe also spoke directly on several items related to the economy:
The federal stimulus funding: “All of these trillions that are going out in stimulus money at the public sector to keep the current, bloated bureaucracies alive for another year, now a year has gone by and the states are broke and say they need more. No they don’t,” Priebe said.
Priebe noted that his firm terminated four employees when its assets fell 35 percent within a year. The company  has subsequently hired two people as it has started to grow again.
How we got here: Priebe didn’t pull any punches when he described how the nation found itself in the current economic conditions.
“There are so many people at fault here,” Priebe said. “Didn’t it occur two years ago that when you give zero percent loans and no income verification that there’s going to be a problem — is that like brain surgery? We don’t need more regulation, we need regulators, and where was (President George W.) Bush: Why didn’t he call in these people and ask, “‘What is going on here?’”
Priebe also faulted Rep. Barney Frank (D-Mass.) and other Congressional Democrats for pressuring banks to make risky loans.
Turning around manufacturing: Priebe cited data which showed declines in manufacturing and noted that southern states with “right to work” laws have seen increases in companies such as Toyota moving there.
“It is not about wages, it is about flexibility. If somebody is doing a bad job, you fire them and that’s the way it goes,” Priebe said.
He then added: “Manufacturing can turn around but we have to be flexible and we have to be wanting these companies to come here.”