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BoA Economist Says Retail, Telecom Slowest to Rebound

NEW YORK CITY-These two sectors should experience the greatest recovery lag as the GDP continues to recover, but strong consumer spending and record-level interest rates should stem any unexpected delays for the industry overall.

By Michael Gilliard | Updated on September 17, 2002

NEW YORK CITY-Structural and production shifts in retail and telecom will cause those sectors to have the greatest recovery lag, Bank of America chief economist Mickey Levy said at a Real Estate Lenders Association meeting earlier today. Nevertheless, he forecasted the US markets overall to rebound smoothly in 2003, in part buoyed by strong consumer spending and healthy interest rates.

The US Treasury, claimed Levy, has learned to stem the effects of broad economic shifts, allowing for less severe recessions and faster recoveries. “When you look back on the Mexican defaults, the Russian collapse, and Sept. 11, at each period you wonder how we were able to recover,” said Levy. “If Sept. 11 had happened in a country with greater economic rigidity, that country would still be in a recession.”

Despite retail having seen “extraordinarily strong returns” in August, Levy predicted that this and the telecom sector will see the slowest growth. “Basic retail will under-perform over the next three years, for both durable and non-durable goods,” said Levy. “And I’m not even smart enough to predict when telecom will begin to see a turnaround.”

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