Pru Panelists: Recovery May Be Slow

A portfolio manager at Prudential Financial Inc. says the shadows over the U.S. economy could start to lift in late 2009.

Edward Campbell, a vice president with Quantitative Management Associates, a money management unit at Prudential, Newark, N.J., gave that assessment here Tuesday during a panel discussion organized by Prudential.

The current U.S. recession could last for the better part of 2009 before there is some recovery, and the rebound likely “will be tepid by historical standards, Campbell said.

The government is doing all that it can to stimulate the economy, but the economy still must shed enormous amounts of debt, Campbell said.

Before the equity markets can rebound, the credit markets will have to settle, Campbell said.

Investment market turmoil has cost investors $30 trillion in paper wealth, Campbell estimated.

But Campbell rejected the idea that the current recession will be as severe as the Great Depression or Japan’s recent “lost decade.”

The government has reduced the risk of that kind of slump occurring, by promptly reducing interest rates to near 0% and “running the printing presses,” in effort to increase availability of currency and private-sector loans.

But James Cornell, chief marketing officer at Prudential Retirement, noted that AARP, Washington, says 20% of 401(k) plan participants have stopped contributing to retirement accounts because of the slump, and that hardship withdrawals and loans against plans are increasing.