Not all Peachy in GT After All

Area residents have mixed feelings on future of recession
Stephen Wall, Staff Writer
Posted: 05/05/2009 05:06:21 PM PDT
Updated: 05/05/2009 05:29:08 PM PDT

Federal Reserve Chairman Ben Bernanke told Congress Tuesday the economy should start growing again later this year, his most optimistic assessment of the country's financial health since the recession struck with force last year.

But Grand Terrace business owner Walt Stanckiewitz doesn't share Bernanke's positive outlook.
"I pretty much take his comments with a grain of salt," said Stanckiewitz, a Grand Terrace councilman who owns La Pasta Italia, a deli and pasta factory in the city. "Using one of Ronald Reagan's terms, it will not trickle down to us small people for some time."

Recent data suggest the recession may be loosening its grip on the country, Bernanke said.
"The pace of contraction may be slowing," he said.

The housing market, which has been in a slump for three years, has shown some signs of bottoming, Bernanke said. Consumer spending, which collapsed in the second half of last year, came back to life in the first quarter, he said.

But Stanckiewitz said his business continues to shrink.
"The economy has to get better and people have to get back to work and have incomes before they start spending," Stanckiewitz said.
Stanckiewitz said his wholesale business making fresh pasta and ravioli for high-end restaurants is down about 50 percent since the recession started. His deli business has dropped 20 to 25 percent, he said.

Tom Pierce, an economics professor at Cal State San Bernardino, said he generally agreed with the Fed chief's comments.
"I think it's possible that we're fairly close to hitting bottom," Pierce said.
But, he said, "the beginning stages of a recovery still don't feel good."
Right after a recession ends, many businesses can increase production without hiring new workers, he said.
"There's often a substantial lag before there's much additional hiring," Pierce said. "In the meantime, you could still be experiencing job losses and therefore an even higher unemployment rate."

Bobbie Forbes, a real estate agent who sells homes primarily in Colton and Grand Terrace, said she recently has seen "a definite increase" in home purchases by first-time buyers.
"Mostly all we have to sell is bank repos," Forbes said. "There is competitive bidding on these properties. That is causing the prices to even out and not drop."

Pierce said the surplus of foreclosed homes on the market will delay the recovery of the local economy.
"We need to have new homes being built before we're going to get any real return of job creation in the construction industry," Pierce said.

The Associated Press contributed to this report.

(Note Realtors contributed to the fall by hyping the house prices, now they get a cut when they are resold again)... When do they and the banks get hit in the shorts for their part in inflating the home prices?