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Experts: Economy will begin recovery in late 2009

Posted January 6, 2009 7:19 a.m. EST
Updated March 9, 2009 5:12 p.m. EDT

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— Economists for the North Carolina Bankers Association and the North Carolina Chamber said they expect the state and national economies to begin recovering from their dismal showings of 2008.

"I'm pretty sure no one here is nostalgic about 2008," Progress Energy Chairman and Chief Executive Bill Johnson told attendees at the 2009 Economic Forecast Forum, held at the Raleigh Convention Center. "We'd rather have something like a do-over, a magic button."

Martin Regalia, chief economist for the U.S. Chamber of Commerce, said he expects the economy to bottom out in the next few months before starting to grow again in the second half of the year.

"It's going to take some time to build up some momentum," Regalia said, predicting job losses would continue to mount into 2010.

Governor-elect Beverly Perdue said state officials were prepared to vote Tuesday on expediting $700 million in building projects across North Carolina, which could create 23,000 jobs. The projects have already been approved by state lawmakers and will be paid for with bonds.

Perdue also said she would fight to get North Carolina's fair share of a proposed $800 billion federal stimulus package designed to pay for other infrastructure projects.

"We intend to put every federal dollar that we can lay our hands on (to work) and spend it efficiently in rebuilding infrastructure and the economy of this state," she said.

A number of strategies, such as targeted tax breaks, expanded work force training and improved government efficiency, are needed to help lift North Carolina out of recession, she said.

"Business large and small, urban and rural, are struggling to survive. The manufacturing industry continues to shrink," she said. "We will root out redundancy and will make state government more efficient in meeting the public's needs."

Harry Davis, the bankers association's economist and a banking professor at Appalachian State University, agreed with Perdue that the federal stimulus package alone won't be enough to help the state's economy.

"We have the eighth-highest unemployment rate in the nation," Davis said, adding that he expects the unemployment rate to top 9 percent later this year.

Most recessions last about 10 months, but this one will likely linger for at least 20 months before the economy begins to recover late this year, he said.

"This is going to be a U-shaped recession, where we go sideways and increase very slowly, as opposed to a V shape," he said. "We're not going to come out of this in a hurry. We're going to come out of it with slow, steady growth."

Johnson urged businesses to use 2009 as an opportunity to lay the foundation of a stronger future by confronting reality, devising thoughtful solutions and rebuilding the confidence and trust of consumers.

Click on WRAL.com at 8 a.m. Wednesday for live coverage of the 2009 Greater Raleigh Chamber of Commerce Economic Forecast to learn what experts foresee in the regional economy.