Soon, later, or next year?
An economic recovery may happen in any one of those time frames, according to three economy watchers who presented very different opinions on when things might get better.
“I think there’s a bit of optimism out there which I don’t share,” said Jeffrey Schappe, chief investment officer for BB&T Asset Management, said at the Maryland Bankers Association’s annual Economic Outlook Forum. “I believe the economy is in free fall. Every indicator I look at has a slope so steep, I wouldn’t want to ski down it.”
Schappe said the current recession would last through at least the end of the year, but his fellow panelists disagreed. Gary Keith, regional economist for M&T Bank, saw a turnaround by the third quarter.
On the other end of the spectrum, Gregory Miller, chief economist for SunTrust Banks, believed the economy could recover by April or May. He said Maryland could also be spared the worst of the recession.
“Maryland may be one of those states not in recession,” Miller told an audience of approximately 450 professionals.
Keith said loans and leases by Maryland banks grew 12.8 percent in the third quarter, well above the national average of 7.9 percent. Adjusted for inflation, total wages and payroll decreased 0.4 percent statewide in that quarter, compared with a national average of 1.2 percent.
Maryland’s close ties to the federal government, and its service-based economy’s employment of highly educated workers, should keep the state afloat, he said.
“The Maryland economy, even though it will rapidly decelerate from its previous levels … will keep its head above water,” Keith said.
The event’s keynote speaker was Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, whose district spans from Maryland to South Carolina. Lacker said he believed the U.S. economy would regain “positive momentum” sometime in 2009, but expressed concern about the precedent set by government reaction to the current crisis.
“Establishing a coherent and stable financial regulatory regime will require rolling back expectations about how the policymakers will respond to the next financial market disturbance or the next recession,” he said. “Doing so will be difficult.”
