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Economist: We must change

• A nationally known economist shares his predictions about a recession recovery and notes that agriculture should do well in 2008.

Barbara Rivera Holmes

ALBANY — Well into a recession, it’s a bit late to start tweaking investment portfolios, which by this point have likely taken a hit.

But what people can do from here on to cushion themselves a bit is to become smarter consumers, especially when it comes to energy.

“We’ve got to change,” economist Donald Ratajczak, who in May 2000 retired from the Economic Forecasting Center in the College of Business at Georgia State University in Atlanta, said Tuesday. “We’ve got to change the way we’re doing this. ... The market is saying, ‘You have to change.’

“Energy materials are not going to be cheap ever again,” said Ratajczak, who spoke at Darton College Tuesday to students, business leaders, area residents and media.

Ratajczak talked passionately about the nation’s increasing energy dependence.

While countries such as Denmark have reduced their energy consumption by 20 percent in the last few decades, he said, the United States’ appetite has grown by as much.

“People are driving around with two tons of steel,” he said of sports utility vehicles (SUVs). “Of course you’re (guzzling gas).”

Ratajczak also criticized the effort being put into alternative fuels such as corn-based ethanol.

“We have been working too hard on what we can do to exploit our energy materials,” he said, rather than changing them.

Recessions aren’t good, but Ratajczak said the market could be worse. Had select few other financial institutions fallen the same week as Bear Stearns, he said, “I wouldn’t be here talking about a recession, but at least about a mild depression.”

Though the market still has some dipping to do, Ratajczak pointed to a few positives during his noon lecture.

First, Southwest Georgia’s agricultural industry should fare well.

“We do have some opportunities in agriculture,” he said. “Agricultural counties are doing quite well. ... South Georgia looks great.”

Although the up-front costs of agricultural necessities such as fertilizer and fuel are up, there are gains to be made in the water-rich region. The situation is quite different than that of north Georgia, Ratajczak said, where there is little available water and where profits from chicken and livestock are being cut by rising feed costs.

“If we have production, we’ll have good prices,” he said.

Despite the good news for Southwest Georgia, an inflation rate of 4 percent — of which about 2 percent can be attributed to food and fuel, he said — isn’t helping folks.

“There’s 4 percent inflation,” Ratajczak said, “and the average person isn’t seeing a 4 percent wage increase.”

Second, the worst part of the recession is near, he said.

“We’ll bottom out in summer and then gradually begin getting better,” Ratajczak said, placing emphasis on a slow recovery.

One of the first sectors that consumers will see correct itself is housing, particularly in construction.

Because home builders have drastically cut production to compensate for a saturated market, that sector will be the first to “come out” of the recession when demand re-emerges, Ratajczak said.

He also said that the stock market would rally just before the end of the recession and that it would do better in 2009.

Ratajczak also expects the Federal Reserve to make further cuts to key interest rates but doesn’t see the credit crunch easing.

Still, he said, “If you are credit worthy, you can get a good mortgage.”

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