Lubbock Avalanche-Journal: Economic recovery is in a "soft spot," Texas Tech grad says
By: Walt Nett
Although the nation's economic recovery has hit a soft spot, the chances of a double-dip recession are slim, said a Texas Tech graduate who now oversees global commercial banking products for Bank of America Merrill Lynch.
Laura Whitley, a 1983 Rawls College of Business graduate in finance, was the lead-off speaker Thursday for the college's 2010-2011 Chief Executives Roundtable luncheon speaker series.
"We are in a recovery, and it looks like it will continue, albeit not with the pace or strength we hoped to see," Whitley told an audience of about 150, describing the nation's present situation as being in the "tail end" of a soft patch in the recovery. "The bad news is largely behind us."
And the good news Whitley offered included:
•Consumer spending is slowly coming back.
•Four consecutive quarters of gross domestic product increases.
•Productivity at an all-time high, while manufacturing output has gained on a month-to-month basis for the last 12 months.
But the way productivity has rebounded remains a problem because manufacturers are reluctant to start hiring and have turned to temporary positions and outsourcing to meet orders.
"We've increased our productivity with probably 7 million fewer workers," Whitley said.
Unemployment, which has hovered nationally around 10 percent for months, remains one of the elements that's keeping the recovery at a slow pace, and she predicted a pattern of layoffs moving from private sector employers into the public sector, as government agencies try to stretch declining revenues.
Continuing softness in the home mortgage sector also is playing a role in keeping the brakes on recovery, particularly in the number of homeowners who are "underwater" -- what they owe on the mortgage is greater than the current value of the house.
Statitically, she said, about 22 percent of mortgages nationally are underwater, but the problem actually is regionalized in four states -- Nevada, Arizona, Florida and Michigan. Nevada leads the list with 62 percent of all mortgages considered underwater, followed by Arizona with 46 percent.
When those four states' situations are discounted, she said, only 14 percent of the mortgages in the rest of the nation are considered underwater.
The result is a major push to work out loan modifications, she said, adding that Bank of America alone this year has modified 650,000 mortgages nationally this year.
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About Laura Whitley
Rawls Associate Dean Jim Wetherbe explained Laura Whitley enrolled at Texas Tech intending to study ballet. Short of funds, he said, Whitley couldn't afford to live in a dormitory, and instead, sold her car and put the proceeds down on a house, and rented rooms to students who also couldn't afford dorm rent. "The dorms weren't that expensive; I was that poor," she said.
Whitley leads a team of 3,500 people who provide debt, treasury and liquidity solutions to commercial clients. Previously with Bank of America, she was president of the Private Bank Central Region, and was president of business banking.