Georgia economists: Recession over, but recovery will be painful

By Gertha Coffee

The Atlanta Journal-Constitution

Two Georgia economists joined other experts in declaring that the recession is over, but they cautioned that the recovery will be prolonged and painful.

“The recession ended in July and the recovery began this month,” Jeffrey Humphreys, director of economic forecasting at the University of Georgia’s business school, said Thursday at a mid-year real estate symposium.

About 400 people attended the event, held by Databank Atlanta, a real estate information firm.

Roger Tutterow, professor of economics at Mercer University, agreed with Humphreys that the recession -- which started in December 2007 -- has ended.

“Even when we acknowledge that the economy has done contracting, I expect several more months or even quarters of sluggish performance,” Tutterow said.

“We aren’t going to see the economy start to expand immediately. And there are some risks out there that could cause it to double dip,” he added, “including spikes in energy prices and the commercial real estate market still has some challenges in it.”

Several factors are driving the recovery, they said, including:

● The housing market has bottomed out in terms of activity in sales and construction. Housing prices will continue to decline for a while, though.

● Lower energy prices.

● Consumer spending is no longer falling, primarily because of federal stimulus programs, such as Cash for Clunkers.

Humphreys forecasts 3 percent growth for the third quarter of 2009 for the overall U.S. economy. That will drop to 1.5 percent in the fourth quarter, he said, because the Clunkers program and the tax credit for first-time home buyers will end.

“We will see slower economic growth in the fourth quarter of 2009 and the first quarter of 2010,” he said. “Then, we will see acceleration when job growth picks up.”

Job losses will continue the rest of the year, the economists said. Georgia’s jobless rate reached 10.1 percent in June, up from 4.7 percent two years ago. Some economists expect it to peak at around 11 percent.

“The worse is behind us; we’ll probably be bottoming out,” said Tutterow.

Only five states lost more jobs than Georgia since 2007, according to the Economic Policy Institute. Unemployment hit Georgia harder than the nation as a whole because of its heavy exposure to construction and real estate, and to related businesses such as the flooring industry, Tutterow said.