TAMPA — Today marks the start of the third quarter, the quarter we finally end the longest post-World War II recession, if David Altig and his fellow prognosticators with the Federal Reserve Bank are right.
Might not seem like much of a recovery, though, by Altig's assessment. Unemployment, which has already passed double digits in Florida, is growing across nearly every sector except government and health care. Manufacturing is "still deteriorating." Business investment demand is "still very soft." And consumers who started to spend again in March and April are once more holding their pocketbooks tight.
"It'll be a limp-along type of recovery if we've got it right," Altig, senior vice president and director of research at the Federal Reserve Bank of Atlanta, told about 140 attendees of a luncheon Tuesday cosponsored by local chapters of the Association for Corporate Growth and the Turnaround Management Association.
Altig dubbed his speech "Is It Over Yet?" His answer, he said jokingly, depends on the meaning of "it."
• If "It" refers to the recession, Altig said he agrees with others at the Fed that economic output will creep back into the positive side this third quarter. But downturns associated with banking crises tend to be very slow recoveries. The consensus forecast in the Fed is for 1.5 percent growth this quarter. Forecasting into 2010 gets muddy indeed, he said, with the widest range of forecasts that he can recall.
"Is there another shoe to drop? Is commercial real estate going to jump up and bite us? … Can banks repair lending sheets and will the regulators let them?" he said. "These are all complete unknowns for the most part."
• If "it" refers to the credit crunch, "It still looks pretty crunchy to me," Altig said. Some credit markets, such as the corporate bond market, appear to have bounced back, but bank lending is still "very, very weak."
The good thing, he said, is that the unprecedented financial Armageddon that threatened the country in the fall is in the past. Probably.
"It feels like we've reached the point that we're in a standard old recession now," Altig said. "We are definitely, maybe, over the hump."
Jeff Harrington can be reached at firstname.lastname@example.org or (727) 893-8242.