Recession Not Yet Behind Us

The Commerce Department reports an increase in the gross domestic product. Some economists hail it as a sign that the recession is over. But renowned University of Houston Economist Barton Smith says not so fast. He told business leaders at his Economic Forecast Symposium that the labor market, a key barometer of any recovery, has yet to rebound. Pat Hernandez has the story.

In economics 101, a recession is two straight quarters of a shrinking gross domestic product—the monetary value of all the finished goods and services produced in a specific time period. So technically, a 3.5% increase in GDP would mean the recession was over. Dr. Barton Smith is economics professor at the University of Houston and director of the Institute for Regional Forecasting. He says he’s not ready to pop open the champagne.

“Everyone pretty much knew that those were gonna be up. But we’re still losing jobs. Initial claims for unemployment, still above 500,000 per week. And so, there are other criteria by which to judge a recovery, and almost all the other criteria have not yet fallen in place.”

He says growth in jobs and per capita income are vital in restoring consumer comfidence.

“We’re still seeing income slip and, until we see income starting to grow again, and jobs starting to grow again, we really won’t be in a recovery mode. Were we magically to start adding jobs again, say a quarter million new jobs a month, it would still take us two and a half years to recover the losses of the past 18 or 24 months.”

He says there is a silver lining for Houston.

“Because we were so late in getting into the recession, that the cumulative job losses in Houston and in many other cities in Texas has been much less than what we’ve seen nationwide. I mean, the nation has been shedding jobs since December of 2007.”

I asked him if a new mayor in Houston would help speed up the economic recovery.

“I don’t think so. I think whoever takes over the reigns at city hall is going to have some real challenges because for the short term, they’re going to have to struggle with tough budget issues. I’m not sure whoever is elected is gonna make much difference, in terms of the rapidity at which we come out of this recession, but it’s gonna take some wise decisions, in terms of how we handle the city budget, to survive at least a couple of years of tough fiscal times.”

Dr. Smith says the economic hope for Houston and the rest of the country is the return of growth in private investments and continued strong growth in exports.

Pat Hernandez, KUHF-Houston Public Radio News.