What will U.S. economy look like when it recovers?

Navistar International Corp. Chairman, President and CEO Dan Ustian speaks during the Reuters Manufacturing Summit in Chicago February 23, 2009.

CHICAGO (Reuters) - No one knows how long this U.S. recession will last, nor how bad it might get.

But few executives who spoke at this week's Reuters Manufacturing and Transportation Summit in Chicago expect that when the U.S. economy emerges from its morass there will be the easy credit and high leverage that fueled the recent boom -- and contributed to its collapse.

"What do good times look like when we come out of this thing?" said Wick Moorman, chief executive of No. 4 U.S. railroad Norfolk Southern Corp (NSC.N). "You are not going to have all that cheap credit, all of that housing activity, all of that stuff fueling the economy in the way that it has for the past number of years."

"So what does GDP look like in good times?" he asked.

Barring a few executives who were more optimistic, the answer at the summit was that U.S. Gross Domestic Product will look leaner and less dynamic for consumers and markets alike than during the housing boom -- but that may not be such a bad thing.

"If people talk about a fundamental reset in the financial markets ... that we won't go back to that kind of easy credit, then I totally agree," said General Electric Co (GE.N) Vice Chairman John Rice, who heads the monolithic conglomerate's Infrastructure Technology business.

HEY, WHO TURNED OUT THE LIGHTS?

The recent boom was fueled by years of farcically easy credit -- for everything from big-screen TVs to houses -- that it will eventually spawn untold books and academic careers.

But it was only a few months ago, in the fall, that the real effects of the slowdown became evident. Railroads like Norfolk Southern had seen freight volumes drop mildly for the year when suddenly everything went south, fast.

"Someone turned the lights out sometime in November, and we saw a decline like nothing we had seen in terms of its precipitousness," CEO Moorman said. "And then it's just stayed down."

For many executives, the scale of the slump eclipses any downturn any of them have seen before.

"Obviously, we're in the middle of the worst global recession since World War Two, or at least that's what the economists tell us," said Dan Ustian, CEO of truck and engine maker Navistar International Corp (NAV.N). "It certainly feels different and more severe than anything I've dealt with."

To counter the credit crisis and the downturn, the U.S. government has committed trillions of taxpayer dollars to shore up the wounded financial system and Congress has approved an economic stimulus package of close to $800 billion.

In testimony to the U.S. Senate Banking Committee this week, Federal Reserve Chairman Ben Bernanke said more concerted efforts of this ilk could bring about a recovery.

"If actions taken by the administration, the Congress and the Federal Reserve are successful in restoring some measure of financial stability -- and only if that is the case, in my view -- there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery," he said.

THE OTHER SIDE

Recovery in the sense that the United States will return to economic growth.

But many say it's unlikely it will return to the growth seen during the peak of the housing boom from 2004 to 2006 where the economy expanded by more than 6 percent annually, according to the U.S. Bureau of Economic Analysis.

"The amount of leverage that collectively consumers had moved considerably upward and ... (the) pace of spending from that was unreasonably high," said Ed Campbell, CEO of Nordson Corp (NDSN.O), which makes equipment that dispenses adhesives and coatings used in manufacturing and consumer products.

There are some executives who think the eventual recovery could actually be robust thanks to the amount of cash the government has pumped into the system.

"Based on all the liquidity that is going into the economy, you could make a case for when this thing takes off, it is going to take off like a rocket," said Bill Zollars, CEO of No. 1 U.S. trucking company YRC Worldwide Inc (YRCW.O).

And Gerry Wang, CEO of container shipping company Seaspan Corp (SSW.N), said he was fairly confident that U.S. and European consumers would rebound quickly.

"Once the crisis is under control, I'm not sure (it) will change the patterns of U.S. and European consumers," he said.

But more executives seem to feel the days of easy credit are gone, perhaps for good -- dampening U.S. growth.

"You are going to have a consumer that is going to have to live more closely within their means and that by itself would suggest that the levels of '05, '06, '07 probably are not to be revisited," said Brad Bell, chief financial officer of water treatment and industrial services company Nalco Holding Co NLC.N. "That is probably a good thing, right?"