Strictly Business: A second recession? Experts split
Sunday, April 29, 2012
I read and write about the economy a lot, and I attend various economic presentations -- because it’s my job and because I’m a wannabe economist nerd. I’ve witnessed two basic views emerge recently about whether another recession is going to hit us this year.
You heard that right, Clark County: Four years after the start of the U.S. financial crisis, with very little in the way of a recovery, there’s talk of the possibility of yet another recession.
Which brings me to the two basic views, one hopeful and the other worrisome.
The hopeful view was expressed by international analyst and economist Alan Beaulieu, who spoke in March to about 250 businesspeople at the Hilton Vancouver Washington.
Beaulieu said he expected the U.S. and global economies -- with the exception of Europe -- to continue to expand this year and well into 2013, although we’ll experience a short, mild recession in 2014.
He also said he doesn’t think the European sovereign debt crisis will drag down the global economy. Investors “have already written off large portions of Greek debt,” Beaulieu said. “Most of the problem has already been swallowed and digested.”
The darker view came from Bret Bertolin, senior economist for the Washington State Economic Forecast Council. Speaking this month at Washington State University Vancouver, Bertolin said the biggest threats to the U.S. and Washington state economies are high energy prices and the Eurozone mess. It’s likely Europe will enter another recession -- if it hasn’t already -- and if it plunges into a full-scale crisis, “then we are likely to see another recession in the U.S. as well,” he said.
Bertolin was asked what should be done about it. He declined to comment, saying he preferred to stick to facts, not policy recommendations.
What he made clear in his speech, though, is that there’s more fragility than there is stability, or, as he put it, the “downside risks outweigh (the) upside risks.”
My heart wants to believe Beaulieu, not Bertolin.
No recession this year and next sounds good. Short and mild in 2014? Fine. Better than long and torturous.
But my brain is putting on the brakes. It takes Bertolin’s facts, mixes them in with increasingly bad news in Europe and sees the cracks in an already brittle global economy widening.
I also think back to other things Beaulieu said, including that austerity, the policy of deficit-cutting and lower spending currently under way in Europe, will work out in the long run.
There are credible skeptics of the theory that government austerity results in economic expansion -- that you can cut your way to growth. They include Nouriel Roubini, the New York University economics professor who warned of the collapse of the U.S. housing market and the global recession.
Meanwhile, the economy of Great Britain, which has been pursuing austerity, has now officially entered a double-dip recession.
I don’t know how all of this is going to play out.
But I shudder to think what will happen to Clark County, a place that’s still picking through the wreckage of the Great Recession -- with 19,690 residents unemployed -- if another big slump reaches our battered shores.
Aaron Corvin is a Columbian business reporter. 360-735-4518, Twitter: