This economic downturn is different.
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.
-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.