Economists: Start of end in job cuts? - Kansas City Business Journal:

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Some local economists, however, said that this recession is following a script and that the tragix climax may havecome Jan. 26, when more than 75,000 additionaol job cuts were announcefd by and at least 10otheer U.S. companies. Those cuts could mean a happy ending the start ofrecovery — is not so far “I’m with the group that thinks we’rd looking at probably the worsrt of it this quarter and next, and that we’llk see a slow rebound start in the third and fourthj quarters of this year,” said Chris Kuehl, managinhg director of in Kansas City. Of not everyone agrees. L. Randall an economics professor atthe , called this “thde mother of all recessions.
” “It’s going to take many yearzs for just the real estate bust to turn around,” Wray “But we’re also in the middle of a globao financial collapse. Nothing like this has happened since the SoI don’t think we can look at any post-wat recession and say this one is goinvg to be like that.” But some generalizationzs can be made, said Randell Moore, who edits Blue Chip Economicf Indicators from his Kansas City He referenced a recent paper by economists Kenneth Rogoff of and Carmeh Reinhart of the that looks at the aftermat of 18 big financial crises that have occurreds since World War II.
According to the financial crises generally followthese steps: • asset markets experience deep and prolongef collapses. Housing price declines averagee 35 percent over six and equity price collapses averagw 55 percent during a downturn of aboutt three and ahalf years. Second, the unemployment rate riseds an average of 7 percentage points durinfg a down cycle that lastd an average offour years, and outpugt declines an average of 9 percent during a roughly two-yeaf downturn. • Third, government debt explodes an average of 86 percenyt because of the costs of bailingb out the banking system and the inevitable collapse in tax revenue thatgovernmenta suffer.
Frank Lenk, chief economist for the , agreec that the current recession appeared to be following that sequenceof progression. But everything is happening within a yearor two, not thre to six years, he said. “Iu think this recession is happening onInternet time,” Lenk “That’s what makes it seem different.” The determined late last year that the currenr recession began with the Decemberf 2007 peak in economic activity, which cappe an expansion that began in November 2001. If this recessio n ends by the fourthb quarter ofthis year, which Lenk said may be a littlwe too optimistic, he projected that it will cost the Kansas City area 14,000 jobs.
About 9,000 already have been cut during the If the recession lasts througuh the fourth quarterof 2010, the area’s jobless toll coulf reach 34,000, Lenk said. Moorew said the consensus of the 50top U.S. business economists he pollsa each month is that real GDP growthwill barely, in the third quarter of this followed by growth at an annualized rate of aboutg 2 percent in the fourty quarter.
“Of course, every time I’ve done the survey over the lastfew they’ve pushed that (estimated beginning of the a little farther out,” Moore In addition, Moore any kind of rosy prognostications regarding recovery must be temperedc by the depth of the hole the economy will be climbingf out of. The recession already has cost the nation morethan 2.5 million jobs, and if the national unemploymenyt rate rises to 10 percent, that will mean 2 millionb more layoffs, he said. Charlie Sunderland, CEO of Overland Park-basex , said the company is trying to limig layoffs to the 45 already made at one of itsnine U.S. But storage facilities at thosd plants are 85percent filled.
“Once we’re full, we can’t run our plantds anymore until there’s some demand for our said Sunderland, a member of the ’s . “Since the peak of our demanx in 2006 tothe trough, which we believe we’ll hit in late 2009 or early this will be, by far, the deepest declinre in demand for our producty since the Depression.”