While the recession is over, trying times are still ahead for Chattanoogans hit hard by financial uncertainty and a fluctuating business environment, said Kurt Reiman, head of thematic research for wealth management firm UBS.
But the area is in better shape than most thanks to continued investment by auto companies and others, due in part to a weakening dollar, he said in an interview Wednesday.
"Certainly the investment we're getting from overseas is good, as is the belief that the American worker is still strong," Reiman said.
Still, incremental gains could be weighed down by home sales, where there is "still a large supply of unsold homes, and still a lot of foreclosed homes that could take several years to work through," Reiman said.
Though he said the poor housing market won't push the country into another recession, "growth will feel more subdued" as layoffs in the construction, wholesale, financial and shipping fields become permanent.
For investors, he recommends a diversified portfolio, strong in consumer staples, utilities and information technology, with income preferred over capital gains.
Reiman researches long-term investment trends for the Swiss-based financial services firm, which has a Chattanooga office with more than $2 billion under management. UBS manages more than $2 trillion worldwide, has offices in 50 countries, and earned over $1.9 billion pre-tax profit in the first half of the year, according to Oswald Grubel, CEO of UBS Group.
Continuing high unemployment, fluctuating economic demand and falling consumer confidence could make the recovery feel a lot like the recession that preceded it, Reiman added.
"There's been some government spending which helped alleviate some problems, but how do you pay for it?" Reiman asked.
Allowing the Bush administration's tax cuts to expire was an original part of the Obama administration's plan, but with the slowing recovery he said "the tax cuts will be temporarily extended until the new year" when a newly elected Congress can debate what in effect is a tax increase.
"It's uncertainty, and not necessarily pessimism, that's driving this," he said. "We've regulated now, between health care, energy and the financial market, about 40 percent of the S&P 500."
Businesses just want to know what the rules of the game are, he said, so they can "operate, invest, and plan for the future. It makes it more difficult to do that when the rules are changing."
Contact Ellis Smith at esmith@timesfreepress.com or 423-757-6315. Follow him on Twitter at twitter.com/ellisthered