Economy: Recession Ends, Recovery Weak
Judicious operators will remain wary despite yesterday’s good news about consumer confidence and rising stock prices. That’s the only conclusion I can draw after reading today’s cautious forecast from the National Association for Business Economics.
The good news is the recession’s end is in sight. The group’s 2,300 members, "who use economics in their work," voiced near-term optimism about the downturn.
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Seventy-four percent of the respondents expect that the recession will end by the third quarter of 2009, although 19 percent believe the turning point may be delayed until the final quarter of this year and 7 percent believe that it may not occur until the first quarter of next year. None of the participants believes that the recession will extend beyond the first quarter of 2010. |
Unfortunately, that’s the only positive note the panel hit. (You can see an abbreviated version of the report here.) The rest of the survey is relatively bleak. Unemployment, for instance, climbs to 9.8 percent by year-end, though inflation is expected to moderate. The NABE predicts GDP to grow a paltry 1.2 percent in the second half of 2009. Any recovery is bound to be weak:
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“The survey found that business economists look for the recession to end soon, but that the economic recovery is likely to be considerably more moderate than those typically experienced following steep declines. Moreover, despite encouraging signs seen in the last several weeks, the NABE panel downgraded the economic outlook for the next several quarters,compared with the previous survey,” said NABE President Chris Varvares. |
The survey blames the feeble recovery on a lack of business investment in the recession’s final phase. It also concludes that "conditions for short- and long-term financing are still viewed as key risks."
For operators, especially franchisors and franchisees, the lack of financing is a key issue. There’s a good discussion of the problem (as well as some solutions) here and in the current issue of "Restaurant Finance Monitor."
TickBocky commented:
