LSU economics professor Robert Newman says the recession is like a head cold. You can choose to treat it, in which case the symptoms will be easier to endure, or you can tough it out. Either way, head colds and recessions eventually run their course. One difference, however, is that with massive spending under the American Recovery and Reinvestment Act of 2009, “in the end we’re going to pay,” Newman said this morning, addressing the inaugural “Breakfast to Business” meeting sponsored by LSU’s E.J. Ourso College of Business. “I don’t what the magic number is, but I’m pretty sure it’s a lot less than $787 billion,” Newman said.
Depending on which economist you ask, the stimulus will produce a real GDP that’s between 1.4% and 3.8% higher than it would have been without stimulus, Newman says, adding the effects of stimulus will “peter out” by 2014 or 2015. In the long run, the economy should be producing near its potential, which is the ideal scenario, though projections are that beginning around 2015 output will dip slightly. Long term, the nation’s unemployment rate should settle to around 4.8%, compared to 8.5% now, Newman says. Louisiana’s unemployment rate is significantly lower at 5.8%. Newman says his gut feeling is that it won’t reach the national average and that Louisiana “may be in pretty good shape” in terms of riding out the rest of the recession.—Steve Clark
