"Welcome to the recession of '08-'09. I hope you've enjoyed it so far," quipped Mercer University economics professor Dr. Roger Tutterow at the outset of his speech to the Marietta Kiwanis Club on Thursday. "It has been a lot of fun being an economist in the last couple years. We've really had to earn our keep."

Tutterow's talk included reason for guarded optimism about the economy, but he warned that we're still a long way from being out of the woods.

"When you talk about energy prices being back at levels that are not problematic to the economy, and when we talk about the residential real estate market having bottomed out and shown some very early signs of expansion, and when you talk about half the credit market - the negotiated-credit market - having loosened up again, you can see we've made a lot of progress in the last 12 months in righting the economic ship. And that's the scenario that we're in the early stages of a gradual recovery is probably a fair read of the economy," he summed up.

First of all, the recession technically ended last summer. But as with nearly all other recoveries, this has been a jobless one so far, the Osborne High grad said.

"Businesses don't add jobs out of social benevolence. They add them because they need the people to grow the output," he said. "Businesses frequently have carried some workers they could have cut, so in the early stages can expand their output without increasing their head count."

The economy shed 7.3 million jobs between the employment peak in September 2007 to where we are today. That was the deepest contraction since the Great Depression when this columnist was a boy. Tutterow predicted that even when the economy turns the corner it will be years before we return to pre-recession employment levels, probably very late 2013 or early 2014.

The recession was driven by three factors, he said. The first was high energy prices, with crude oil hitting $140 a barrel (now back down to $75).

"That amounts to a tax on households and businesses," he said.

The second "driver" was the housing market. Homebuilding and new home sales were down about 80 percent from the late 07 peak to the trough.

"The lenders and mortgage brokers and bankers and real estate people in this room have lived through the most pronounced downtown in residential real estate since at least the late 1950s," he said.

Those effects were especially hard felt in metro Atlanta, which led the nation in residential construction for much of the 1990s and 2000s.

"We dropped about 94 percent from peak to trough," he said.

Home sales hit bottom last January. They were later helped up by the tax credit for first-time homebuyers approved by Congress and sponsored by U.S. Sen. Johnny Isakson (R-Ga.). The effect of that tax credit was somewhat limited in Cobb, however, by the income test that accompanied it and limited the program to entry-level housing, Tutterow said.

"But the good news is that we have bottomed out in residential real estate, and we are coming back. The absorption rates are slowly rising," he said.

There is a danger, however, that after the supply drops, there may still come a period in which builders have trouble getting the credit they need to build more homes.

The other part of the real estate puzzle is home prices. Stories in the national media point to collapsing home values.

"But all real estate markets are local," Tutterow pointed out.

He and other economists had noticed that the fastest-rising prices were predominantly in Coastal Florida, the West Coast and the I-95 corridor from Northern Virginia to Portland, Maine.

"And today? Those markets are down more than 30 percent," he said. "Prices in Atlanta are down less than 20 percent. We're down about 60 percent of what the national average is. We haven't seen the collapsing values that you have in some of these markets."

The third factor driving the recession was the credit crunch, the worst since the Depression. The Federal Reserve now has cut the prime rate nine times since 2008, from 5.25 percent to effectively 0 percent.

"The good news is that with the interest rates effectively zero, I'm comfortable they are done cutting," Tutterow quipped. "I think rhetorically they've already started raising them. They've said recession is over. So by the third quarter of this year they will start gradually start raising short-term rates. And we want them to do that. It tells us they think the recovery is starting to gain some traction."

But he warned that banks remain under tremendous pressure. Alpharetta has been described by the Wall Street Journal as "ground zero for bank failure" in this country, and Georgia has led the nation in bank failures, the professor said.

He added that we will probably see as many Georgia banks fail this year as last.

"We are far from the end of the crisis," he said. "But we are working our way through this."

Cobb has been fortunate in that it has a very diversified economy, Tutterow said. Education and health care make up a big portion of our economy and are relatively recession-proof, he noted.

"We don't feel the pain and can come back a little faster than many other communities," he said. "Cobb County remains a great place to conduct business and a great place to live."

Bill Kinney is associate editor of The Marietta Daily Journal.