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Recession Lessons

This economic downturn is different.

It’s much longer than the average, which was 10 months for all the previous recessions since World War II.Hoffman.JPG

It may turn out to be deeper, too, in terms of just how much the economy will contract.

But what will be its result? Will there be lasting changes in the economy that we’ll say began at this point?

I put that question to Stuart G. Hoffman, chief economist at PNC Financial Services Group.

His predictions:

-When this recession is over, we will save more. He pointed out that up until the mid-1980s, people regularly put away five cents of every dollar earned. But then something happened. Our houses went up in value so rapidly in recent years that many people relied on that as a source of funds for future spending. Now that we’re going through the worst downturn in generations, Hoffman predicts we’ll begin again to put money away and refrain from spending it all.

-We’ll have four years of very active government involvement in the economy. And we’ll end up with the deficit to prove it.

-Globally, the U.S. will become more intertwined with the world and particularly China. As other countries have to buy our debt.

He expects the recession to begin to end as this year closes. Recovery will come in 2010 and 2011. But it’ll feel more like convalescence than a bouncing out of the sick bed.

Florida will lag the U.S. and the global recovery, in his view.

Categories: Economy (42)
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About the author
You've got the job of managing your money. No one in school taught you how. But you and I, we can teach each other, how to handle it, how to save for retirement, how to make money last, how to educate the kids, how to make a budget work. The conversations I have with my readers are fun. Money's important, but discussing it does not have to be boring.

Harriet Johnson Brackey Harriet Johnson Brackey, the personal finance columnist for the Sun Sentinel, is an award-winning business reporter. Her columns for 2008 were named "The Best in the Business," a national award chosen by her colleagues at the Society of American Business Editors and Writers.

Brackey has worked at Business Week magazine and at USA TODAY, where she was a founder and part of the original staff of the Money section at the country's first national newspaper. After nearly 11 years there - spent covering the 1980s bull market, the insider trading scandals, the 1987 crash - Brackey left Washington, D.C., and came to The Miami Herald. She spent the next decade writing a column about personal finance that chronicled the stock market's Internet boom and bust, as well as the popular Money Makeover features.

Brackey also has done commentaries for Marketplace Money, which airs on National Public Radio and The Nightly Business Report which is broadcast on more than 250 PBS television stations nationwide. She also has been a radio guest on WLRN’s Miami Herald News.
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