The economy is going to get worse before it gets better, a visiting economist said Tuesday, and Chattanooga may not be immune to what experts forecast to be another year of economic malaise.
In the best case, economists predict slow growth in the region through the end of 2012.
"There's no way to avoid a recession," said Richard Yamarone, economist for the Bloomberg Brief newsletter. "Basically, the engine is running out of gas."
Real income growth adjusted for taxes and inflation is at zero percent for the year, Yamarone told a gathering of Chattanooga Technology Council members in the Business Development Center. His dismal outlook is based on economic data and business surveys, which he says point to more joblessness and associated misery in the future.
In fact, the U.S. misery index, the sum of the country's inflation and unemployment rates, rose in October to its highest level since 1983, Yamarone said.
He calls current government efforts to restart consumer spending "gimmicks," suggesting that the third round of stimulus spending languishing in Congress be given directly to consumers instead of "gimmicky programs like cash for clunkers, cash for appliances, or the first-time homebuyers tax credit."
"The economy is not doing so well," he said. "Why not give that stimulus directly to the people to rebuild the country?"
UTC Economist Bruce Hutchinson concurred in part, though he suggested that the uncertainty generated by new federal initiatives like the Dodd-Frank financial regulations law or the Affordable Care Act to reform health care also could be partially to blame.
"We need to convince the business sector that we're not going to change regulatory policies for five years," Hutchinson said. "If we get together and pass that, we'll see growth within six to 12 months."
While much of the Chattanooga area has so far been spared the worst of the recession, the region can't hold out forever if the country crashes, he added.
"The Chattanooga area is very much host to regional-type businesses, which thus are going to be impacted by the entire Southeast region economically, which in turn is linked to the country," Hutchinson said.
Growth in business diversity, including new additions in the technology and manufacturing sectors, have "reduced the risk" that the Chattanooga area could experience the same hardship brought on in Dalton, Ga., with cutbacks in the carpet industry.
"There's definitely a chance that we could have another recession, for all I know we may find out statistically that we have entered that already," Hutchinson said. "Nevertheless, I think it's much more likely that the country and Chattanooga are simply in a very low growth period."
Contact staff writer Ellis Smith at esmith@timesfree press.com or 423-757-6315.