'The Current Recession: How Long? How Deep?' Keynote Address at Abington Savings Bank's Semi-Annual Business Breakfast.

Business Editors

ABINGTON, Mass.--(BUSINESS WIRE)--Nov. 28, 2001

Wellesley College Professor Karl Case Says U. S. Government's

Monetary and Fiscal Policies More Effective in Fighting Current

Economic Downturn than in Past Recessions

A Wellesley College expert on the causes and consequences of boom and bust economic cycles, and their relationship to regional economic performance, today delivered the keynote address at a breakfast meeting sponsored by Abington Savings Bank.

Professor Karl E. Case said the current economic downturn is different from the last three recessions (1974-75, 1981-82, 1990-91). That's due, he said, to U. S. Government monetary and fiscal policies having the potential to work effectively this time around to fight the recession that began in March 2001. He also indicated that low inflation rates and continued consumer spending, in response to low interest rates and available credit, will help get a recovery started.

The nation's banks also are in a much better financial position, compared to 10 years ago, he said.

"The situation is worse than it was 2-1/2 months ago," Case said, "but I think we will avoid a particularly nasty story, assuming we don't have another disaster like September 11th."

"Some people are predicting that the New England economy could be as bad as it was in 1991, but I doubt it, " he continued. "Consumers are behaving more like they did in the post-World War II era."

Case attributed that, in part, to the wealth effect of the housing market in New England, where $100 billion in wealth was created in the 1980s and again in the 1990s.

While the demand for residential real estate is down, and houses remain on the market longer than in recent memory, housing prices remain stable. He said the commercial real estate market is softening, with vacancy rates increasing, but the vacancy rate was virtually zero a year ago, and valuations tend to come back strong.

Professor Case said the country is in a so-called U-shaped recession, where the decline is slower and the up tick slower than in a V-shaped recession, where the downturn is extreme and quick and the recovery is equally extreme and quick.

He also predicted the capital gains tax will not be eliminated entirely.

Professor Case is the Katherine Coman and A. Barton Hepburn Professor of Economics at Wellesley College, where he has taught for 24 years. His research has focused on real estate markets and prices. He received his Ph.D. in Economics from Harvard University. He is a visiting scholar at the Federal Reserve Bank of Boston and serves on the boards of directors of the Mortgage Guaranty Insurance Corporation and the New England Economic Project.

Professor Case is the author or co-author of five books, including Economics and Tax Policy, Property Taxation: The Need for Reform, and Principles of Economics, a textbook adopted by 350 colleges and universities.

He was introduced by Jack B. Meehl, Jr., Senior Vice President -- Business Banking at Abington Savings Bank. The Business Banking Department of Abington Savings Bank has sponsored the Business Breakfast series for the past five years. The event was attended by 150 South Shore corporate executives, business owners and entrepreneurs. The next in the semi-annual series of business breakfasts is scheduled for June 2002.

Founded in 1853, Abington Savings Bank is a Massachusetts-chartered savings bank with offices in Abington, Brockton, Canton, Cohasset, Halifax, Hanover, Hanson, Holbrook, Hull, Kingston, Pembroke, Randolph and Whitman. Owned by Abington Bancorp, Inc. (NASDAQ NMS: ABBK), the Bank had assets of $791,630,000 as of September 30, 2001. Deposits are insured by the Federal Deposit Insurance Corporation and Depositors Insurance Fund. Abington Savings Bank is a Small Business Administration (SBA) Preferred Lender.

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