UNCC Expert: Economy About To Turn Around

After 15 months of a national recession, the silver lining is finally starting to show.

A new forecast by a local economic expert predicts that recovery is just months away.

University of North Carolina at Charlotte economist John Connaughton said Tuesday the recession is just one to three months from being over. He said recover in 2009 will be modest, but it will be strong in 2010.

"It will be a sluggish recovery in the second half of 2009 but a robust recovery in 2010," he said. “I'd not be surprised to see a growth rate 4 percent in 2010. We’re through the worst couple months.”

Connaughton’s report also addressed reasons behind the current economic downturn. He said one of the biggest contributors is people avoiding spending money.

Donnie Cooke, who has sold hot dogs uptown for 20 years, said he’s seen a dramatic drop in purchases since last fall.

"30 percent of my customers were laid off or moved. And right now, a lot of people are bagging lunch because of the economy," he said.

Connaughton said the latest statistics show North Carolina is following the national trend with consumer confidence at an all-time low.

“When consumers are fearful, they don't buy large ticket items and economy just will not go forward,” he said.

The second problem with the economy, he said, is that banks are hoarding money. Connaughton said their reserves are 500 times more than usual.

In January 2009, banks held onto $800 billion, he said. But change, he believes, is here.

“What’s really good news is that it’s down to $650 billion,” he said.

That means banks are starting to lend again. Connaughton said that’s why the end of the recession is near.

Cooke said after 15 months in a recession, he’s glad the upswing will coincide with his busy season.

“When the weather breaks, they'll be eating more outside. Everybody's got to eat, and I make my own stimulus plan," he said.

•PDF: UNCC Economic Forecast