Here's where we are.
The great r ecession ended 16 months ago. We’re in a recovery that graphically resembles the letter “U.” We’re still at the bottom of the “U.” It’s not a double-dip “W.”
Here’s where we’re going.
Up. Housing will not lead the recovery, and we’ll need to wait until next year before prices start rising. Unemployment is steady. Consumers have yet to start spending.
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Here’s what we need.
These and other opinions were among the thoughts offered Wednesday as Umpqua Bank hosted a luncheon in downtown Tacoma focusing on the financial outlook for 2011 and beyond.
A panel of three – Umpqua President and CEO Ray Davis, Washington Chief Economist Arun Raha and economist Michael Parks of Marple’s Northwest Business Letter – spoke to a gathering of 320 clients, local officials and other guests.
The audience chuckled when Raha said the g reat r ecession ended in June 2009.
He clarified by saying job growth is slow, unemployment is high, and the worst might be over, but “it still feels as if we are in a recession.”
He called it “an agonizingly slow crawl” that is shaped like the letter “U.”
There are, however, three reasons to feed optimism: “Boeing, Microsoft and exports.”
“On the other hand ”
Someone commented that there is no such thing as a one-handed economist.
“On the other hand, housing is not going to lead us out of the g reat r ecession. It will be mid-2011 until we see signs of life.”
“This recession represents five lost years,” he said. “Compared to the 16 lost years of the Great Depression, that’s not too bad.”
Parks called the economic downturn “a once-in-a-lifetime decline,” and said any recovery is being delayed in part by uncertainty, as businesses are “sitting on their wallets” looking for answers concerning 2011 tax rates, energy costs and health care costs.
The biggest risk to Washington state is a trade war with China, he said.
Next comes a sharp increase in the value of the dollar, which would limit exports.
Davis said his own optimism “has been dosed with an incredible amount of reality.”
He likened the recession to Hurricane Katrina.
“People are still digging out,” he said. “We have a lot of work left to do.”
He noted that the Troubled Asset Relief Program has begun to make money for taxpayers.
He said Umpqua has repaid $214 million it was allowed under the Capital Purchase Program – and repaid it with an 8 percent premium.
So when will we feel the recession is over?
“When we’re back on level ground. We’re still in the ditch,” said Raha.
Parks suggested a sign along the freeway counting the days when things have not gone suddenly sour.
Raha counseled that things will return to normal – such as normal is.
And after that?
“We’re not going to get into trouble the same way we did it last time,” he said. “We’ll find a new way.”