Recovery’s only just begun
My youngest son was laid off a week and a half ago. His older brother was laid off months ago, when the newspaper circulation facility where he worked was closed. He has yet to sniff a new job. No comments yet. You can be the first!
My own mortgage is under water, so my wife and I can’t sell our house without taking a loss. That’s despite having a prime mortgage after paying 20 percent down on the house purchase. That ought to give you a good idea of how much the home’s value has plummeted. And we’re to be considered lucky because my wife and I both have jobs — so far.
For us, the recession is not over by a long shot.
That’s why reporters, economists, politicians and all sorts of talking heads should be careful with their words. Our language tends to disguise the reality that the economy is a dynamic process that never stops. Our words draw imaginary lines like latitude and longitude on the economic map, but they are just imaginary lines. There is no first day of a recovery that we can circle on our calendar. The best we can do is mark high points and low points — after they happen.
Whatever good signs exist to show that a recovery has begun are just that, signs that a recovery has begun, but they are NOT signs that the recession is over. The United States is not in mid-recovery, and we’re nowhere near an economic boom — not while unemployment remains high.
These facts prompted New York Times reporter Peter S. Goodman to write: “But if the Great Recession has indeed relaxed its grip on American life, it has been replaced by something that might be called the Great Ambiguity — a time of considerable debate over the clarity of economic indicators and the staying power of apparent improvements.” (See “Divergent Views on Signs of Life in the Economy,” posted Jan. 4, 2010.)
Some sectors of the economy and some states are doing better, but a recovery accompanied by a national seasonally adjusted unemployment rate of 10 percent (as it was in November and December 2009) is hardly a sign of good times, no matter how big the bonuses of executives at bailed-out banks are.
In November 2009, Arizona's unemployment rate stood at 8.9 percent. Arizona was lucky compared with Michigan (at 14.7) and California (12.3), but doesn’t North Dakota’s 4.1 percent jobless rate make that frigid place suddenly sound warmer than our desert clime? (Seasonally adjusted stats on state unemployment rates for December are to be released by the U.S. Bureau of Labor Statistics on Jan. 22.)
According to a Jan. 4 report from Bloomberg.com: “Employers have cut more than 7.2 million jobs in the last two years, the biggest employment loss since the Great Depression. Measured annually, the U.S. jobless rate probably will average 10 percent in 2010, according to the median estimates of economists surveyed by Bloomberg. That would be the highest rate in government records dating to 1948, after rising to a 26-year high of 9.3 percent last year.”
And, if we look at the housing market as the catalyst that started our economic implosion, then we need to pay attention to this bit of news from the same article: “The number of prime mortgages overdue by at least 60 days more than doubled in the third quarter from a year earlier to 838,000, according to a Dec. 21 (2009) report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision.”
Robert Shiller of Yale University and Karl Case of Wellesley College, the economists who created the S&P/Case-Shiller Home Price Index, told Bloomberg that the record unemployment will drive more prime mortgage holders into foreclosures. (See “Housing Animal Spirits to Be Banished by Prime Foreclosures,” posted Jan. 4.)
However, optimism about the economy is not unwarranted. We know the economy is cyclical and it will come back in the long term, but the question for people like my laid-off sons is “What do we do to hold on in the short term?”
11 Jan, 2010 >