The news headlines might scream that this is the worst economic recovery ever, but one economist said it mirrors past recoveries, and in some areas is even better.
“This recovery is falling in line with the last two recoveries,” said Jim Paulsen, Wells Capital Management chief investment strategist.
At this rate, he said, the economy should gear up in the last half of 2012 and show real growth. Unemployment will still be high and the national deficit will still be big, Paulsen said.
“But, we will have a recovery that looks like the last two,” he said.
Paulsen was a keynote speaker Oct. 14 at the15th Annual University of Colorado at Colorado Springs Southern Colorado Economic Forum. The forum brought together economists with wildly varying opinions about whether the economy is headed toward a double-dip recession or whether it is holding steady in recovery, following similar recovery patterns of recessions past.
Recovery patterns of the past show that it takes three to five years for an economy to bounce back. This recession is no different, Paulsen said. He made a case for a recovery that is on track to see some better days in the coming year. Gross Domestic Product growth is projected to be 2.5 percent in 2012 — similar to the patterns of growth following recessions in the early 1990s and early 2000s, Paulsen said.
Jobs are growing faster than in recessions past and real retail is “far strong than either recession of the past,” he said.
Not so fast, other economists said. UCCS economists Tom Zwirlein and Fred Crowley have a more pessimistic view, and said a double dip recession is “probable for the national and local economy.”
“The plot is about to thicken,” Zwirlein said as he provided a different view of the local economy in the Southern Economic Forum report.
Zwirlein said there are some strong headwinds, including the effects of the Dodd-Frank banking regulation bill and continued high unemployment in the U.S. and in Europe that will change early predictions of recovery.
“We’ve got a long way to go to pull ourselves up to what might be considered the norm,” he said.
Zwirlein said global economies are exhibiting modest to weak growth and financial problems within the European community are contributing to uncertainty.
“The Forum suggests that more conservative projection for national GDP growth of 1 percent in 2011 and -.5 percent in 2012 is in order,” the forum’s report said.
It leads to low consumer confidence, Zwirlein said, and holding on to money instead of spending it.
“Consumers are likely to cut back on their expenditures and increase their savings for what appears to be the coming rainy day,” Zwirlein and Crowley wrote in the forum’s report. “This often means the economy will slow and unemployment will rise.”
Paulsen said some of the negative indicators of this recovery, like jobs, are similar patterns of recoveries past. CEOs, he said, are making due with a scaled back work force. Meanwhile productivity will continue to surge.
“CEOS will try to squeeze as much out of you as they can, and then they will start a hiring cycle,” he said.
The economy is in its third year of recovery, Paulsen said. And, similar to economic recoveries of the past, the U.S. sentiment is one of fear and paranoia, he said.
“So far, this recovery has rolled out in a normal fashion,” he said. “I think it will improve over the next few years.”