Everyone is feeling the effects of the economy these days. And many are wondering when things will begin to improve. A leading Alabama economist says not to expect too much too soon.
"The world has changed," said Bob Allsbrook, long-time chief economist for Regions Bank.
Allsbrook told WSFA 12 News Anchor Mark Bullock about the fundamental financial shift occurring in the U.S.
"Consumers and businesses dramatically changed their spending habits in the last two years," he explained. "And these changes are going to last for the next several decades."
But Allsbrook does see improvement on the horizon -- not because of consumer or business spending, but because of government spending.
Bank bailouts from the Federal Reserve and economic stimulus packages passed by congress prevented the country from diving into an all-out depression.
It's true that taxpayers will have to pay that money back, but most economists feel that there was no other choice.
"I don't like that my children and grandchildren will have to pay for all this, but I think the alternative would have been even worse," Allsbrook said.
How do you benefit?
So how do you make the most of a down economy? First, experts say to take advantage of lower interest rates.
Allsbrook described the current rates as "generation lows." That means that now is the time to refinance your mortgage or make that big-ticket purchase you've been thinking about.
For investments that are linked to interest rates, like CDs or treasury bills, experts recommend making them only on a short term basis. That way, the money can be reinvested later when rates go back up.
But even more important than investing, according to Allsbrook, is reducing debt and increasing savings.
He predicts a dramatic rise in inflation and taxes in the coming years, which means consumers will need more money just to survive.
"The fundamental nature of the economy is not going to ever go back to where it was 2 to 3 years ago. The country's growth rate long term potential has been ratcheted down," Allsbrook warned.
Right now, he says the U.S. economy is still shrinking. He predicts growth will begin again sometime in 2010. But even then, the rate of growth will be lower than average. And it's likely that lower growth rate will become the norm.
You can watch Allsbrook's full interview by clicking on the appropriate video link above.