Chattanooga: Tepid recovery seen before 2010

The nation’s economy will continue to experience negative growth rates for the first half of the year before beginning a “tepid” recovery late in 2009, an Atlanta Federal Reserve Bank official said Wednesday.

The Fed also predicts 2010 will mark the economy’s return to a normal growth pattern, said Michael Chriszt, an assistant vice president of Bank to the Chattanooga Technology Council.

Though the country is in a recession, it is important to look at the broad economic indicators such as GDP and unemployment to get perspective on just how bad it is, said Mr. Chriszt. The current unemployment rate is about 7.2 percent, compared to 25 percent during the Great Depression, making such comparisons seem exaggerated, he said.

“(The current recession) is more comparable to what happened in the early 1980s, but it’s nothing close to what we saw in the 1930s,” he said.

The state’s economy appears to following the national trend, Mr. Chriszt said, and most likely will in the future.

The upside for Chattanooga continues to be Volkswagen’s investment here and the potential for job growth, he said.

Richard Casavant, dean of the College of Business at the University of Tennessee at Chattanooga, said that locally, the city is counting on growth from Volkswagen during a time when the Fed predicts inflation to be low. He questioned the impact of money flowing into an economy already flush with cash from stimulus plans once the business cycle picks up again.

“Do you have the ability to sop up that much money that quickly?” Dr. Casavant said.

Mr. Chriszt said there is no simple answer and no plan in place to handle such a problem, but the officials at the Federal Reserve Bank of Atlanta discuss inflation regularly.

In his talk to Technology Council members, Mr. Chriszt discussed job growth in the information technology sector.

Chattanooga has shown growth in what he referred to as high-tech employment — jobs involved in developing and producing new technology — and the information services industry, he said. In 2006 and 2007, Chattanooga added thousands of jobs in information services — a 30 percent increase since 2000 — far exceeding the number of positions the industry added in Tennessee as a whole, Mr. Chriszt said.

The only other city with comparable job growth in information systems is the Seattle area with its large Microsoft presence, he said.

“Overall, if you compare what’s happened here over the last decade to some other areas, you all come out on top,” Mr. Chriszt said.