COLLEGE STATION (Real Estate Center) – Three things have to happen before the current recession can be declared ended. One is underway, said Dr. Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University.
“I think the economy will begin to turn for the better once the health care and cap-and-trade issues are settled. Those two political debates are creating substantial uncertainty for business owners and investors,” he said.
The personal savings rate is the second trend to watch, said Dotzour.
“Over 70 percent of the U.S. economy is consumer spending,” he said. “When the savings rate finally levels out, consumer spending will start to increase again.”
Increased corporate profits are the third trend that must occur to bring the recession to an end. There is some indication that has already begun. The last three data points were all up. Rising profits lessen the urge for companies to lay off workers.
Research Economist Dr. Jim Gaines added that the increased corporate profits have come from reduced costs, not the kind that leads to expansion.
“Keep your eye on these three issues,” Dotzour said. “When they are resolved, the economy will begin to turn the corner.”