State economists: Double-dip recession unlikely

LIHU‘E — “Double-dip” sounds more like an ice-cream flavor than anything likely to happen with the economy or lose sleep over, said Dr. Paul Brewbaker.

The TZ Economics principal was the featured speaker at Thursday’s Kaua‘i Board of Realtors general membership meeting and educational forum.

Sure, a double-dip recession could happen, but the probability of that encounter is unlikely, barring a natural disaster like a hurricane, Brewbaker said.

And the likelihood of a hurricane went up this year, “the minute they took money out of the (state) hurricane-relief fund,” he said with a chuckle.

While “anything’s possible,” a double-dip recession is doubtful, University of Hawai‘i Associate Professor of Economics Dr. Carl Bonham said Friday.

Although “Greece is the word,” as it’s economic crisis has triggered fears in the U.S., he is “so over it,” Brewbaker said.

“The U.S. economy is not nearly as exposed” to the crisis as European banks are, Bonham said. Unless something similar to the Lehman Brothers’ financial fallout occurs in Europe, it probably will not affect the U.S.

However, that doesn’t mean America is out of the woods yet, as the second half of 2010 will likely not experience the kind of economic growth the first half of the year did, Bonham said.

State and county government “problems” are largely playing a role in how slow the U.S. economy is going to grow during the second half of the year, he said.

But stimulus money “did a lot” and “if it hadn’t been there, things would have been a lot worse,” Bonham said.

The completion of stimulus-funded projects, state and local governments “cutting back” and unemployment rates still high are all contributing factors which are “going to keep the U.S. economy from growing very rapidly,” he said.

Nonetheless, the recession was over last summer, according to Brewbaker, and recovery will end this summer.

And the economy will experience a 3-percent growth rate over the next few years, he said.

Though there has not been an “official” declaration by the U.S. of the recession’s finale, Brewbaker makes a “reasonably-safe assessment,” Bonham said.

Also, 3 percent is “very reasonable,” but is still “an anemic rate of growth” for the U.S. economy and “not something you get excited about,” Bonham said.

In fact, it is “real slow in terms of historical growth rates out of recession,” he said.

Recovery, on the other hand, is a bit more complicated to define, he said.

It depends on what indicator you’re looking at, Bonham said with regards to whether recovery will conclude by the end of summer 2010. If you only observe the Gross National Product, one might be able to make the assumption, but with millions still without jobs, “by no stretch of the imagination will you call that a recovery.”

“We are adding jobs every month, it’s just we’re not adding enough,” he said.

And this is “what matters to people,” Bonham said.

Nevertheless, the job count “just started to turn up” and employment is “lagging evidence of economic recovery,” Brewbaker said.

Secure employment coincides with confidence in consumer spending, Bonham said. Without it, people “are not out buying houses and cars,” which ultimately “plays a roll in GDP growth.”

“We don’t have a strong base of consumer spending,” he said.

Still, Kaua‘i Board of Realtors President Kelly Liberatore said she has a “renewed hope that we are heading in a positive direction” after attending last week’s meeting.

“Given that Brewbaker has expertise specific to Hawai‘i, I felt that he was confirming what we agents have been seeing for ourselves,” she said. “We are noticing that, like water finds its own level, so too are (housing) prices leveling and stabilizing.”

 And it is “good news” that the island “may start to experience the effects of recovery sooner than previously projected,” she said.