Dr. Frank Hefner Photo by Warner Montgomery Dr. Frank Hefner, College of Charleston economics professor, addressed the Columbia Rotary Club at Seawell’s during its lunch meeting on Monday, January 4. Introduced by John Durst, Hefner directed the crowd, “If anyone profits from what I say, do let me know.”

Hefner was speaking to Rotary instead of attending the concurrent American Economic Association and its 4,000 economists at the national convention in Atlanta.

Hefner attended undergraduate school at Rutgers, the State University of New Jersey, earning his BA in economics. Also in economics, Hefner earned his master’s and PhD at the University of Kansas.

He founded the Office of Economic Analysis at the College of Charleston in 2007, where he is the director. The Office of Economic Analysis is a group of “people interested in applied research relevant to local community,” as Hefner put it. He participates every year in the Regional Advisory Committee of the S. C. Board of Economic Advisors.

On December 2, Hefner was one of a three– economists panel at USC’s Darla Moore School of Business. He offered economic projections to the Moore School, and he continued on Monday to forecast the state’s economy for the Rotarians.

The estate tax law changed January 1, and the small business owner still can’t plan for the next five years because of the likelihood of another estate tax change in the next year or two. The small business owner needs stability and predictability to plan with any foresight. The big fear now, Hefner suggests, is a new estate tax applied retroactively, breeding insane uncertainties.

Researching finance for their businesses, small business owners are finding banks uneager to lend even though the liquidity crisis is over now that the banks have money on deposit. The melt–down has stopped. But with little business lending, there’s little business expansion and little rehiring — a jobless recovery. It’s a recovery only a statistician could love, as Hefner described it.

The stimulus didn’t succeed, arguably, and the second stimulus under consideration probably won’t work much either, something like what Japan experienced in the early 1990s. The cash for clunkers comes under question as the country suffers the hangover following the buying binge.

The country is borrowing from the Federal Reserve and then lending the money to federal agencies.

Meanwhile, even though there’s improvement in the economy, S.C. unemployment is likely to continue to worsen. The jobs lost in S.C. will take at least five or six years to come back. Like Japan in the 1990s, the U. S. could suffer a lost decade.

In the 1990s, there were housing permits increasing at a rate above that in the population gains, which couldn’t last for long. Now the problem is resurfacing in commercial real estate lending. Somehow, many five–year commercial real estate loans clustered around the same five years, and they’re coming due this year.

On top of all that comes health–care reform, costing small businesses how much for how many employees?

Hefner’s final note was on capacity utilization. In the 1990s, the country’s industries were operating at about 80 percent capacity, but now they’re running along at 60 percent capacity.

Which means the gross domestic product might grow, the economy might expand, but don’t expect many new jobs.