While the nation is in the grips of a serious recession, the sky isn't falling.
"We've got to keep this in perspective," said Terry Fitzgerald, senior economist at the Federal Reserve Bank of Minneapolis. "It's important for policy makers to keep it in perspective. It's important for all of us to keep it in perspective. I'm not going to argue we're not having a serious recession. We are having a serious recession. There is no question about that."
Fitzgerald spoke Thursday at the 21st Brainerd Lakes Area Development Corp.'s annual meeting at Timbermist. He said a key is to put this post-World War II recession in perspective with the others the nation has lived through.
Fitzgerald started by reading from Time magazine quoting articles talking about the deepest economic slump since the Great Depression, the losses of 1.2 million jobs, the deep concerns of consumers, reckless borrowing and economic turmoil so severe it makes even the employed lose faith in their job future.
The article date? Jan. 13, 1992.
Terry Fitzgerald, senior economist at the Federal Reserve Bank of Minneapolis, spoke at the Brainerd Lakes Area Development Corp.'s annual dinner Thursday. The nation is in a serious recession but it's not as harsh as others in the post-World War II period, Fitzgerald said.
After 1992, Fitzgerald said there was a little slow growth for a couple of years that led to pretty good years in the late 1990s.
"We went from the end of the Earth to a pretty good economy and I think that's what's going to happen now," he said.
Fitzgerald served as a visiting scholar at the Federal Reserve Bank before joining the bank full time in 2006 as an economist. He previously worked as a St. Olaf College professor of economics and as an economist with the Federal Reserve Bank of Cleveland.
At the BLADC meeting, Fitzgerald said there have been 10 recessions since 1948. While Fitzgerald said economists are better at explaining what happened than predicting the future, he thinks the economy will pick up by year's end. This recession matches up most closely to the recession of the early 1980s. Fitzgerald said most measures show this recession is not the harshest. It is the biggest economic decline in 25 years.
Both Fitzgerald and BLADC board president Kevin Larson pointed to media attention focused on an economy going over the cliff. Fitzgerald said there isn't support for those dramatic reports for the overall economy. However, he said it is a phrase that aptly describes the housing market.
The diversified Minnesota economy mirrors the nation's, Fitzgerald said. Brainerd feels the slowdown in tourism, manufacturing and construction. Relative to other parts of the state, Fitzgerald said this area seems to have been hurt more by tourism losses - down here 5-10 percent - based on room rental data.
Business cycles, with destruction and creation, are part of the capitalist environment. The former Soviet Union was able to get rid of them. "But that didn't turn out so well," Fitzgerald said, getting laughs from the crowd. Fitzgerald said examples of bad policy that could harm an economic recovery come if efforts are made to save every failing company or if protectionism grows in regard to American jobs. That would only makes things worse, he said.
RENEE RICHARDSON may be reached at email@example.com or 855-5852.
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