Economist: United States recovering from recession, but slowly

Anirban Basu says the housing market must participate for the economy to build momentum

November 16, 2011|By ANDREW SCHOTZ |
  • Economist Anirban Basu delivered his annual Washington County Economic Summit presentation Wednesday at Fountain Head Country Club near Hagerstown.
By Ric Dugan, Staff Photographer

HAGERSTOWN — The United States is no longer in a recession, but recovery has been slow.

So slow, in fact, an increase of 2.5 percent in gross domestic product, a common measure of economic health, has been called a "growth spurt."

If the economy is going to build momentum, the housing market, which has stalled, will have to participate, economist Anirban Basu said Wednesday night during his annual Washington County Economic Summit presentation.

Close to 200 people attended the summit at Fountain Head Country Club near Hagerstown. It was presented by the Hagerstown-Washington County Chamber of Commerce and the Hagerstown-Washington County Economic Development Commission.

Basu, the chairman and chief executive officer of Sage Policy Group Inc., a Baltimore economic and policy consulting firm, said some experts have predicted 2012 GDP growth of around 1.8 or 2.3 percent, which he called "eminently reasonable."

Basu sprinkled his far-ranging, comprehensive analysis of economic factors with deadpan humor and timely references to sports, entertainment and the latest royal wedding, getting many laughs.

After the New York Stock Exchange dropped 5.7 percent in the first three quarters of 2011, the "least worst" of 12 worldwide exchanges, it's hard not to be proud, he said.

"If that's not inspiring, I don't know what is," he said.

Basu pointed a laser at a slide showing jagged gains and losses on the Dow Jones Industrial Average since January 1980. Despite the volatility of the last several years, the current market level is not far from what it might be if there were a steady gain over time, he said.

Noting that the country's debt level just hit $15 trillion, he said the United States hasn't recovered from the recession, but, with nine consecutive quarters of GDP growth, "we're recovering."

In 2009, every state in the union was in a recession, but now most are considered "recovering," according to one of the many slides Basu used.

North Dakota is in the best shape, by far, and Nevada at the bottom, he said.

Maryland, at 7.4 percent unemployment in September, tied for 16th lowest in the country, was doing better than the national rate of 9.1 percent.

But Basu said a better comparison is Virginia, which has a similar government-heavy economy — and a lower unemployment rate, 6.5 percent.

Education Week has named Maryland's public school system the best in the country for three straight years. However, Virginia has a stronger business climate, Basu said.

Washington County's 9.6 unemployment rate was 22nd out of 24 jurisdictions in Maryland in September. Basu called it "stubbornly high."

Among nonfarm employment, jobs were up 1.2 percent in the United States and 0.5 percent in Maryland from September 2010 to September 2011, but down 2.7 percent in Hagerstown, one chart showed.

Maryland's Eastern Shore counties had some of the highest unemployment rates in September, corresponding with a weak real estate market.

Basu said much of the wealth there has moved in from other places, such as St. Michaels in Talbot County, where Donald Rumsfeld, the former defense secretary, and Dick Cheney, the former vice president, have homes and "can monitor each other."

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