by Karen Brune Mathis
Managing Editor
The good news about the economy: It’s come off two quarters of reasonable growth.
“In my estimation, it’s the real thing,” said David Altig, senior vice president and research director at the Federal Reserve Bank of Atlanta. He said the national economy is growing at a 3.2 percent annual rate.
The bad news: The housing market. “A big bounceback in housing prices is not going to happen,” he told the Economic Roundtable of Jacksonville Tuesday.
Altig doesn’t think housing prices have hit bottom and that there is a nine-month inventory of homes, compared to four or five months in good times.
There’s also a large number of homes whose mortgages are in delinquency and those houses will be added to the inventory eventually.
The ugly news: Employment and unemployment. “This just stinks,” he said.
Altig said the nation lost 7 million jobs since the recession began in December 2007. If the economy added 200,000 jobs a month, it would take three years to regain those jobs.
“We’re nowhere near 200,000 jobs,” he said, reminding the audience that the nation added just 36,000 jobs in the latest monthly count.
“We have an unprecedented issue with long-term unemployment,” said Altig, referring to the number of people out of work 27 weeks or more.
He also said that the combined rate of unemployment, underemployment and discouraged workers was nearing 17 percent, compared with the standard measure of unemployment, now at 9 percent.
That standard measure counts people who were actively seeking work when surveyed.
Still, Altig is optimistic. He said that three years ago, he wouldn’t have had any “good” news to report and would have been hard-pressed to even find “bad” news.
It all would have fallen under the “ugly” heading.
The recession ended in mid-2009, he said, “if you didn’t know that.”
He said a recovery has begun.
“Finally, this thing has taken root,” he said. “A year ago, almost anything could have knocked us off track. It does not feel that way now.”
Altig, citing a consensus of economic forecasts, predicts that gross domestic product will grow 3.2 percent for the year, unemployment will end at 9.3 percent and inflation will be 1.9 percent.
For 2012, he predicts growth at 3.3 percent, unemployment at 8.6 percent and inflation at 2 percent.
Altig presented his “economic outlook for 2011” at the Jacksonville branch of the Federal Reserve Bank of Atlanta.
The Economic Roundtable of Jacksonville plans one of its meetings each year at the Fed branch, which is Downtown.
The Federal Reserve Bank consist of 12 regional banks. The regional Atlanta bank has five branches in Jacksonville, Miami, Birmingham, Nashville and New Orleans.
The Federal Reserve is the nation’s central bank and was created by Congress in 1913 to make monetary policies to stabilize prices and moderate long-term interest rates. It also regulates banks for safety and soundness.
Altig, also a university professor, focuses his research on monetary and fiscal policy issues.
In addition to advising the president of the Atlanta Fed bank, Altig oversees the bank’s regional executives and research department. He also serves as a member of its management and discount committees.
He is an adjunct professor of economics in the graduate school of business at the University of Chicago.
Before joining the Atlanta Fed, he was vice president and associate director of research at the Federal Reserve Bank of Cleveland and before that was a faculty member in the department of business economics and public policy at Indiana University.
The Economic Roundtable of Jacksonville, which has about 150 active members, was founded in 1975 to provide a forum for economic issues and a network for local economists and those interested in business economics. It is a chapter of the National Association for Business Economics.
It meets regularly from September to June.
356-2466