HIGHLAND LAKES — Recent claims by Federal Reserve Chairman Ben Bernanke that the recession is showing signs of retreat may elicit a sigh of relief from those weary of dreary economic news.
However, there is still much work to do on the road to recovery, local economists say.
According to the Associated Press, Bernanke said Sept. 15 the worst recession since the 1930s is probably over, although he warned that pain — especially for the nearly 15 million unemployed Americans — will continue.
“Whenever you consider recovery, the downturn is always sharp and the upturn is slow and long. Recovery takes a long time. We’re still looking at a very long, slow haul,” said University of Texas economist Daniel Hamermesh.
Hamermesh added that while any progress with the economy is a welcome change, the best news has likely already come and gone.
“All signs suggest that the recession ended in July, but really, all that means is that things are probably not going to get any worse. Unemployment may even continue rising for the next few months,” he said.
That unfortunately appears to be the case. According to the Texas Workforce Commission, the state’s seasonally adjusted unemployment rate rose slightly to 8.0 percent in August, up from 7.9 percent a month ago. However, Texas is faring well compared to the national picture, said Texas Workforce Commission Chairman Tom Pauken.
“Despite our strong Texas economic foundation, the national recession continues to have an adverse impact on our state. Nonetheless, the unemployment rate in Texas remained well below the 9.7 percent national rate,” he said.
In addition to employment, consumer confidence is another critical factor in recovery, Hamermesh said, although he was careful to point out that spending is not likely to rebound to post-recession levels.
“People may be gun-shy about spending right now, but you have to admit that they were spending like drunken sailors for a couple of years. Even when their confidence returns, I can’t see them spending as high of a portion of their salaries as they did just a couple of years ago,” he said.
More conservative spending and shaky confidence definitely affected some aspects of the Marble Falls marketplace this summer, said Christian Fletcher, executive director of the Marble Falls/Lake LBJ Chamber of Commerce.
“I had a moment of concern when I saw the (September) comptroller’s report,” Fletcher explained, referring to a monthly report which details how much sales tax is distributed to local counties and cities following sales activity from the previous month.
“Prior to this we had several months with some very modest growth over last year’s numbers. But this month’s report was down over 10 percent from the same month last year, and I haven’t seen that for quite a while,” Fletcher said.
According to that report, local governments statewide received $428.3 million in monthly sales-tax allocations, a 12.9 percent decrease compared to a year ago. So far this calendar year, local sales-tax allocations are down 3.3 percent compared to the same period in 2008.
But the slowdown is not prevalent everywhere, Fletcher said.
“I think it depends on the sector,” he said. “Small retail is struggling quite a bit, but larger retailers seem to be doing just fine.”
In an effort to help turn things around, Fletcher added that greater emphasis is being put on promoting the region’s assets and stimulating tourism.
The recently formed Hotel Occupancy Tax, or HOT, Steering Committee is focusing on new advertising campaigns to draw tourists and their dollars to Marble Falls.
“We’re going to have a much more substantial push on advertising to try to get more people to come into our community,” he said.
In spite of suppressed sales activity and increased unemployment, Mayor George Russell said he has begun to notice some positive signs in recent weeks.
“Our city is holding its own,” he said. “I have even noticed increased conversation with new businesses and development that was not there a few months ago.”
Russell added that while prospective companies interested in doing business in the area may not be ready to sign the dotted line just yet, at least the dialogue is resuming.
“It looks like it is on the road to possible recovery, but I think it will still be at least a year before see a big difference,” he said. “We’re leaning forward but not taking any steps just yet.”
While some signs point up and others point down, an economist with the McCombs School of Business, Dr. Michael Brandl, urged caution with putting any timeline on the recovery process and warned there is really no concrete way to forecast business cycles in the throws of a recession.
“It is very, very difficult to predict when a recession will end. Essentially, there are too many moving parts of the economy: consumer confidence, business confidence, financial-market stability, bank lending, energy prices, the rest of the world, etc. to be able to predict with any amount of accuracy how things will turn out and when,” he said.
