DEL.ICIO.USMY OPINION: THOMAS OLIVER
‘Jobless’ recovery not so assuring
The Atlanta Journal-Constitution
Wednesday, October 15, 2008
Don’t be fooled by the roller-coaster ride of the stock market.
We are in a recession — regardless of where the Dow ends today or tomorrow or next month.
• Most economists were predicting a mild recession before the market melted amid the credit crisis. Now, revisions are being made, and they aren’t getting prettier.
Jeffrey Humphreys of UGA said the markets and the economy are so unstable now that he’s waiting until the dust settles somewhat before revising his full, formal forecast. That in and of itself isn’t very comforting.
But he can already see the need for revising his prediction of a “mild” recession, which he says started here in March.
At least 120,000 jobs will be lost in Georgia in the next eight months, Humphreys now says of what will be a moderate recession.
That is 15,000 a month.
Those are ugly numbers that represent real people.
Although the recession should end in the second half of next year, the recovery “will be jobless and joyless,” Humphreys said. “In other words, the unemployment rate will continue to rise even though the recession technically has ended.”
Doesn’t sound like much of a recovery.
Georgia’s jobless rate will continue rising from 6.3 to 9 percent in 2010, Humphreys says.
And of course, that rosy scenario is based on a “moderate” recession. By the time things are clearer, the Athens-based economist might be predicting a severe recession.
On average, recessions last about 10 months to a year. Longer, more severe ones, 16 to 18 months.
An 18-month recession would run from March to this time next year.
But it could be worse. We may not be talking averages, here.
Roger Tutterow, Mercer University economics professor, says three factors have driven our local economy into the ditch: housing, energy and the credit crunch.
The road to recovery requires those to turn around.
Tutterow said it would be late spring or summer before new home construction returns.
With oil down 45 percent since its high this summer, gasoline prices have dropped, with reports of gas under $3. For Atlantans with our long commutes, that’s the equivalent of a tax cut, Tutterow says.
That may be the only good news we get for a while.
As for the credit crunch: “These are so rare they are hard to gauge,” he said.
In fact, no one is predicting when the credit crunch will end because nothing has worked so far.
Tuesday’s announcement that the U.S. Treasury would spend $250 billion to purchase stakes in the nation’s banks was anticipated Monday by the markets, which staged a one-of-a-kind, one-day rally.
Such are the dynamics of the roller coaster.
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