Recession 'likely over,' but still ...

The recession is probably over -- but hold the applause.

That was the consensus Tuesday of two bank economists, including the most closely watched one of them all: Federal Reserve Chairman Ben Bernanke.

Bernanke, a South Carolina native who grew up in Dillon, and Mark Vitner, a Charlotte-based economist with Wells Fargo, delivered similar pronouncements in separate appearances Tuesday, with both saying the nation's worst recession since the Great Depression is "likely over."

But they also hedged their comments, saying it will be a long, slow crawl out of the abyss.

"It appears the recession has ended, and the economy is moving to a recovery," Vitner said in a telephone interview after delivering his remarks at Winthrop University in Rock Hill. "We expect the recovery will be relatively sluggish."

Bernanke also was cautious, saying recession-induced pains, especially for the nearly 15 million unemployed Americans, will persist.

The Fed chief said the economy likely is growing now, but he warned that growth won't be sufficient to prevent the unemployment rate, now at a 26-year high of 9.7 percent, from rising more.

"From a technical perspective, the recession is very likely over at this point," Bernanke said in response to questions at the Brookings Institution in Washington.

"It's still going to feel like a very weak economy for some time because many people will still find that their job security and their employment status is not what they wish it was," he said.

The recession, which started in December 2007, has claimed a net total of 6.9 million U.S. jobs.

Even if the economy logs "moderate" growth in 2010, unemployment is likely to stay elevated, Bernanke said.

"Unfortunately, unemployment will be slow to come down. It will come down, but it may take some time," he said. "Obviously, that's a very serious concern."

Vitner, who has closely tracked the South Carolina economy for years, likened the budding recovery to the aftermath of an ice storm, when suddenly the sun breaks through, power is restored and the temperature rises 20 degrees.

"Technically, it's not freezing any more, but it's still pretty cold," he said. "Things are no longer getting worse. We are not seeing the mass layoffs we saw earlier this year."

He pointed to retail sales posting their first gain in six months with a 0.7 percent climb in August, excluding car sales. Including auto figures, retail sales climbed a solid 2.7 percent, though they are still down 5.9 percent year-over-year.

International trade is starting to thaw, and the housing market is picking up, thanks to low interest rates and an $8,000 federal tax credit for first-time home buyers, he said. That program expires Nov. 30.

"The pieces seem to be coming together that suggest that an economic recovery is under way," Vitner said.

He said the caveat is that the housing market has a way to go before it starts to rebound. Also, home prices haven't bottomed out yet, he said.

Vitner said the Carolinas were hit harder by the recession than some parts of the country, with unemployment sitting at double digits largely because of deep cutbacks in manufacturing.

That's been particularly damaging for the counties around Charlotte, which rely heavily on the factory sector, and in the Pee Dee, which is saddled with a low percentage of high school graduates.

"That makes it tough to attract new industry and fill jobs when they become open," he said. "New plants use sophisticated equipment. They won't hire people if they can't operate the equipment."

Vitner said the Charleston economy is a little more resilient to the recession because of its solid tourism base, though he pointed out that not as many companies held events at Kiawah Island or in downtown Charleston because of budget cuts.

Charleston's economic base also is diversified with industry, but firms tied to the struggling automotive market suffered during the downturn. Port trade contracted significantly during the recession, but Vitner said "that is beginning to look a little bit better, though it's still considerably below where they were a year ago."

Vitner expects third-quarter growth in the nation's gross domestic product of 3.7 percent, with another 2.5 percent in the fourth quarter, though he attributes the increases to a reduction in inventories.

"Inventories are still falling. They are just not falling as much as they previously were," he said. "We probably won't see meaningful growth in inventories until the second half of next year. That's when we expect employment to begin to rise."

As the nation claws its way from the depths of the recession over the next few months, Vitner said some numbers from time to time will suggest a full recovery.

"But by and large, strong growth is not likely to return until the second half of next year," he said.

POLL: Public opposes intervention

Americans decidedly oppose the government's efforts to save struggling companies by taking ownership stakes even if failure of the businesses would cost jobs and harm the economy, a new poll shows.

The Associated Press-National Constitution Center poll of views on the Constitution found little support for the idea that the government had to save AIG, the world's largest insurer, mortgage giants Fannie Mae and Freddie Mac, and the iconic American company General Motors last year.

Just 38 percent of Americans favored government intervention — with 60 percent opposed — to keep a company in business to prevent harm to the economy.

Similarly strong views showed up over whether the president should have more power at the expense of Congress and the courts, if doing so would help the economy. Three-fourths of Americans said no, up from two-thirds last year.

"It really does ratify how much Americans are against the federal government taking over private industry," said Paul J. Lavrakas, a research psychologist who analyzed the results. The poll involved telephone interviews with 1,001 adults nationwide. The survey was conducted Sept. 3 though 8 and had a margin of sampling error of plus or minus 3.1 percentage points.

    — Associated Press

The Associated Press contributed to this report. Reach Warren Wise at 937-5524 or wwise@postandcourier.com.