Economist Predicts Growth in Third Quarter
August 12, 2009
As we enter the second half of the year, an economist recently
predicted growth may be on the way. Dr. Martin Regalia, vice president
for economic and tax policy and chief economist for the U.S. Chamber
of Commerce, shared his insight during a keynote speech at the recent
I-CAR Conference in Washington, D.C.
"The fact of the matter is, I think we're beginning to pull
out," he said. "In the third quarter, we should start
to see some growth."
Regalia pointed to several reasons for his optimism.
One is that prices are declining.
"Everything starts and ends with the consumer," he said.
Another factor is the ongoing results of the economic stimulus package
passed earlier this year.
"People only now are starting to realize how close we were
to the edge of the abyss," he said. "Businesses couldn't
The entire capital market was not functioning."
But now, things are different, he said.
"The fact of the matter is, we're still here and we still have
a banking system," he said. "We were that close and I
think we're pulling out of it now."
The economic stimulus package, Regalia said, continues to play a
role, even if some believe it had downfalls.
"The package wasn't timely, tempered or targeted, but the one
thing it was was big," he said. "It was big and we needed
it at the time."
Though the economy is cyclical, Regalia said this isn't the usual,
"This time, we're seeing very weak consumption," he said.
"We've been not only seeing a steep downturn, but an unbalanced
With regard to consumption and how consumers have reacted to the
economy, Regalia compared the nation to Japan.
"We work to spend, and they work to save," he said.
But, he noted, if more Americans are able to find jobs again and
grow their incomes, spending will inevitably pick up.
"If we can generate income growth, you're going to generate
spending," he said. "In the last couple of years, we've
seen major declines in wealth."
The stabilization of the stock market should help with this, he
said, and this will "spur wealth."
Even when speaking to a group of collision repairers, Regalia emphasized
that the housing market is important to the overall economy.
"New home sales and prices have stabilized a bit," he
said. "On a year over year basis, they're down, but on a monthly
basis, they've stabilized
and stabilization is an uptick."
But Regalia wasn't completely optimistic.
"We still have this subprime piece of the market and that's
a problem," he said. "
We're still seeing the delinquent
rate go up and we're still seeing high levels of foreclosure."
But, we're still getting there, Regalia said.
"We've got to kind of walk before we can run," he added.
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