http://www.reuters.com/article/newsOne/idUSTRE52U6CG20090331U.S. private prison operators may have lost their "recession-proof" tag, but analysts still expect the industry to ride out the current slump, propelled by rising demand for its services and the cost benefits of outsourcing.
The United States -- already home to the world's largest prison population -- is projected to have even more people behind bars over the next few years.
Crowded government facilities and related health concerns will keep demand for private prisons on an upward long-term trajectory, Macquarie Research analyst Cooley May said in a note.
States can save between 10 percent to 20 percent on the cost of housing an inmate from outsourcing to private players, according to analysts.
"Overall, it's a pretty steady business -- pretty good recession business -- as long as the states can meet their budgets," analyst Robert Wasserman of Wasserman & Associates Inc said.
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Private operators are able to build facilities faster than governments as "they don't have as much red tape," analyst Wasserman said.
Also, since private operators can raise funds from either the debt or equity market to build new facilities, the government does not have to bear the risk of raising money, Patnaik said.
Long term, "unless there's a big change in public perception toward corrections, I think (private prison operators) are going to be good," Wasserman said.
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every comment I can think of Skinner wouldn't like