Economic damage could last

WASHINGTON — Even if the U.S. economy avoids sliding back into recession, the continuing weakness is beginning to damage muscle and bone, inflicting long-term damage on many families and business that will make a full-blown recovery much harder to achieve.

The devastating recession of four years ago struck a nation flying high on a housing boom and helium-inflated clouds of consumer spending. But the current slowdown is striking a nation already on its economic knees.

“That’s the danger right now: You’ve got an economy that didn’t recover,” said Ethan Harris, Bank of America’s chief economist for North America. “We’ve had some healing,” he said, noting that banks are in better financial shape as are some households.

“But the rehabilitation hasn’t been completed,” he said, and a relapse would be like “hitting an already sick patient.”

Today Federal Reserve chairman Benjamin Ben S. Bernanke is expected to discuss the economic outlook and central bank’s role in the months ahead, but he is unlikely to announce any immediate policy changes despite widespread anticipation of new action.

And new numbers scheduled to be released today on overall economic growth are also not expected to brighten prospects.

What worries economists like Harris that an economy that shows little or no growth does more than inflict immediate pain. It inflicts damages and costs that will have lasting impact.

The last recession, the worst in six decades, cost the country about $2.5 trillion, including the government’s stimulus spending, losses at mortgage lenders Fannie and Freddie, and additional funds for unemployment benefits, according to Moody’s Analytics. And as the weak economy lingers, the tab to taxpayers will keep growing and put additional pressure on the already strained fiscal budget.

And the lost income, business opportunities and other private sector costs were far higher.

Looking forward, what concerns economists is the possibility that the growing disparity between the rich and everybody else will widen, that the nation’s entrepreneurial energy will be sapped, and that a generation of young workers whose earning power and confidence have already suffered will decline even more.

“These are things slowly undercutting the underlying resilience of the economy,” as Harris put it.

Paul Dales, an economist at Capital Economics, says a second recession would most likely be mild and short, if for no other reason than that the “fat-purging process” already took place. During the Great Recession, many companies slashed payrolls and other costs, leaving them with lean inventories and much less excess staff and unused production capacity.

Take Darlene Miller, president of Permac Industries, a precision-machining shop in a Minneapolis suburb. Miller says her sales have returned to 85 percent of where they were before the recession. The firm has clawed back by becoming more productive and getting new certifications to build its aerospace and medical lines.

Over the long recovery, she has added just one net new employee, even though she cut a dozen positions during the recession.