A few days ago, I made the case for a double-dip recession. Yesterday, in a smart piece in the AJC, Georgia State University economist Rajeev Dhawan — who has been right more often than not about the weakness of the state’s economy — argues for continued slow growth.
About 10 days ago, I summarized a number of Dhawan’s arguments, and the AJC op-ed doesn’t add much new information to that. But last week featured some particularly grim economic data, which made me view the near-term more negatively. Dhawan doesn’t refer to any of that data, and his prediction for slow growth remains.
Dhawan is yet another analyst who talks of “headwinds,” which in Georgia’s case means “high oil prices, Georgiaâ€™s moribund banking sector, which is impairing small-business growth, and a crippled construction industry, which will cause our prime driver of growth â€” residential and commercial building â€” to languish in the coming years.”
Dhawan sees a rocky year, but he sees a continuation of the slight recovery underway since 2009:
In the meantime, we can take comfort knowing that job growth will happen in Georgia, although it will be a bit weak in calendar year 2011.
The recovery will be significant for 2012, when Georgiaâ€™s economy will add 76,600 jobs. That looks good but itâ€™s almost one-half of what was seen in the go-go â€™90s when we were firing on all cylinders.
All bets are off, Dhawan concludes, if the Fed raises interest rates too early, which could “snuff the recovery prematurely.”
I’ve never talked to Dhawan, but when he speaks, I listen. And I sure hope he’s right. He uses the word “recession” only once, and that’s in the context of the “Great Recession”, a phrase I’ve opted not to use in any of my writing for a variety of reasons. (Maybe I should post something about that decision at some point.)
And I’m guessing that my most trusted blogger, Bill McBride at Calculated Risk, is going to post something in the next couple of days expressing similar concerns — and also saying that the odds are with continued recovery. But I’m just not so sure. I think many states, including Georgia, have hit tipping points and have responded irrationally. I think stocks are likely to slide considerably, which will lead many well-to-do Americans to feel a pinch, even if they’re fine. Some analysts have discounted the impacts of the withdrawal of QE2, but I think the program, like so many other Fed moves over the last couple of years, has probably worked far better than detractors want to admit.
I like being right, but here’s one time I’d love to be wrong. I sure don’t want to see the nation slide back into recession, but I find Dhawan’s arguments for continued growth incomplete and therefore unconvincing.