Is it 2008 all over again?

Not really. The economy has some momentum: Corporations are flush ... banks are lending ... and household finances are improving.

By Jay Fitzgerald
Globe Correspondent / August 14, 2011

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Earthquakes are followed by aftershocks, which compound previous damage, hamper recovery efforts, and revive fears of a new disaster.

That is essentially what has happened over the past 10 days, as the aftershocks of the 2008 Wall Street crash continued to shake the global economy and markets, said Kenneth Rogoff, a Harvard economics professor. As with earthquakes, financial aftershocks are damaging and frightening, but tend not to be as destructive as the original disaster.

“A drop of this [past week’s] magnitude hurts,’’ Rogoff said of recent stock price plunges. “It hurts confidence. But will it be as bad as 2008? There’s always a risk. But it doesn’t look like it. It doesn’t have to be.’’

The turmoil that rocked stock markets last week has invited comparisons to the economic collapse of three years ago, but conditions today are different. Certainly, the economy is struggling, and most analysts expect a long, difficult recovery that will continue to feel like a recession for millions of Americans.

Another collapse, however, does not appear likely. Credit markets are functioning, banks are lending, and the economy, while sluggish, has some forward momentum. US households are fixing their finances, paying down debt, and increasing savings. Corporations are enjoying big profits and sitting on record piles of cash.

“There’s no comparison to where we stand today compared to where we were in 2008,’’ said Richard Bove, a bank analyst at Rochdale Securities.

It’s easy to see similarities between the recent turmoil and that of three years ago: too much debt, reeling banks, plunging stock prices, slowing economies, falling confidence, and growing fears of the unknown.

Still, economists and analysts say there are differences in the details. For example, the current debt crisis involved sovereign, or national, debt, as opposed to private debt.

The bankruptcy of Lehman Brothers three years ago wiped out creditors and investors alike, sending shockwaves through the world’s interconnected banking system. But sovereign defaults, not uncommon historically, usually lead to a restructuring of debt, often paying creditors 50 to 70 percent of their original loans. “Nations don’t go out of business,’’ said Rogoff.

Economic conditions are also quite different. The US economy was contracting when Lehman, weighed down by subprime-mortgage holdings, collapsed.

By then, the US economy had shed 1 million jobs and the jobless rate was rising rapidly, up by nearly a percentage point from the start of 2008. In contrast, the economy in 2011 has produced about 930,000 jobs. The jobless rate, while much higher than three years ago, is essentially unchanged at about 9 percent, according to government data.

The banking sector is also in better shape than it was three years ago. Capital reserves for US banks are about 15 percent higher than before the Lehman collapse and about 13.5 percent higher for Massachusetts banks, according to the Massachusetts Bankers Association.

In April 2008, the majority of US banks were already tightening credit to both small and large companies, according to Federal Reserve data. Three years later, most banks are no longer tightening credit and about 15 percent are easing credit to companies, the Fed reported.

Profits are at record levels, with companies holding huge stashes of cash in reserve. For example, cash and short-term investments of large, publicly held Massachusetts companies have jumped by $9 billion, or more than 30 percent, since the third quarter of 2008, according to an analysis for the Globe by Capital IQ, a data tracking firm.

Consumer finances are also improved. US households have trimmed more than $1 trillion in debt since the middle of 2008, according to Moody’s Analytics, a forecasting firm. Credit card delinquencies have fallen below pre-recession levels, according to credit rating agency Experian.

“We’ve made a lot of progress over the past three years,’’ said Mark Zandi, chief economist at Moody’s Analytics. “The fundamentals of the economy are still pretty good.’’

Still, said Zandi, the recent turmoil in financial markets, Washington, and other capitals has likely harmed the economy. “Even if there’s no double-dip recession, it will delay and impede any recovery,’’ he said. “To what extent, no one really knows.’’

The US economy, while improved, is still weak. It grew by a meager 1.3 percent in the second quarter of 2011, the same as the second quarter of 2008. Consumer spending was also essentially flat in the second quarters of 2008 and 2011 - down 0.1 percent three years ago and up only 0.1 percent this year.

S.P. Kothari, deputy dean and a financial expert at MIT’s Sloan School of Management, worries that this month’s market mayhem will only prolong what was already going to be a slow, painful recovery for the US economy.

“We’re in this for the long haul in terms of raising the economy,’’ said Kothari.

Another reason for concern: Few policy options are available to boost the economy.

As the recent debt-ceiling debate showed, Congress is deeply divided, making it highly unlikely that any major stimulus can be passed.

The Fed said that it will keep short-term interest rates near zero for at least the next two years, but it doesn’t have a lot of other tools at its disposal. Nicholas Perna, an economist and visiting lecturer at Yale, puts the chances of another recession at about 40 percent.

“That’s what is really spooky this time,’’ said Perna. “There’s not a lot policy makers can do.’’

If another recession hits, few expect as severe a nosedive as the one that occurred in 2008 and 2009, when companies began laying off employees by the hundreds of thousands each month. Instead, the economy would probably dip slightly and limp along as it has in recent months, economists said.

“I don’t think we’re looking at unemployment jumping from 9 percent to 13 percent or anything like that,’’ said Kothari.

Harvard’s Rogoff, who studied 800 years of financial crises, said the key is what unfolds in Europe, where central bankers are scrambling to shore up the finances of several nations and avert potential debt defaults.

“Europe is the center of this crisis today - and they’re not stabilizing it,’’ he said. “There’s this ticking time bomb and it shows no sign of going away.’’

In the end, Europeans will probably solve the sovereign debt problems, Rogoff said. But if they falter, all bets are off.

“There is a risk this could be as bad as what happened after Lehman Brothers,’’ he said, “because they haven’t stepped forward with a plan yet.’’