The economy has probably bottomed, but the turnaround is at least nine months in the future.

PARK CITY, Utah - The economy has probably bottomed, but the turnaround is at least nine months in the future.

That was the view presented by Douglas Holtz-Eakin Tuesday at the Material Handling & Logistics Conference, sponsored by HK Systems in Park City, Utah, one year after the collapse of the U.S. banking system.

“The economy is showing signs of hitting bottom,” said Holtz-Eakin, an economist, former director of the Congressional Budget Office and former chief economic policy adviser to John McCain's 2008 presidential campaign. “But I expect that growth in the second half of 2009 will be flat, and I don’t see a return to growth until the second half of 2010.”

That is gloomier than the analysis from many other economists, but Holtz-Eakin believes the American consumer is still too short of cash to begin spending again.

“Households have lost $14 trillion in wealth,” Holtz-Eakin explained. “Since so many are boomers who are going to retire over the next 10 years, I see nothing but pressures for them to keep saving, not spending.”

What might turn the economy around? Holtz-Eakin outlined three scenarios.

1) Government spending is one possible solution, but that carries a risk of government becoming an even larger percentage of the economy.

2) Business begins to spend again on capital projects to improve operations.

3) America changes its role in the global economy from a net importer to a net exporter.

The challenge to either of those last two scenarios, according to Holtz-Eakin, is that there are no government policies presently in place to promote business growth or a pro-trade agenda.

“I’ve given you a pessimistic view of the economy,” Holtz-Eakin concluded. “But I’m not a pessimist. Ultimately, Americans are pragmatic and we solve our problems. I believe we will get out of this.”