Archive for July, 2009
Colorado has given
back its entire job gains made in the past seven years. Welcome to the
I nominate jobless
recovery as the oxymoron of the year. Who thought this up? Clever “tweeters” in
the White House? A catchy headline writer waiting for his pink slip at
No, it turns out
we had jobless recoveries after the 1991 recession, just as George H. W. was
ending his term (like father, like son), and again in the early 2000s, when
“outsourcing” left us all talking to tech support in India.
But that was then,
this is now. The economic playing field for everyone, especially investors
agonizing over the numbers, is full of ruts. Jobless ranks are so big, and getting
bigger, that if there really is a recovery, somebody, somewhere has got to ride
to the rescue. But who is this masked man?
At least it’s not
as bad here as a lot of places, Colorado officials say. But the numbers are
Please clue me in,
I asked people who actually read “The Economist,” on how we end a recession
when GDP growth demands consumer spending. People who couldn’t live without a
new high-def TV have become tightwads overnight. Ask bankrupt GM or Eddie
Bauer. Savings rates suddenly are at their highest since December 1993.
Here’s the short
answer from the experts: “We don’t know.”
Richard Wobbekind is predicting a “slow, general recovery.” It’s possible, he
explains, that pent-up demand for houses and cars can kick-start spending.
Bankers must become convinced that
they can lend again, and some are.
Also in the
“maybe” category is a technology-led recovery. Companies that have hoarded cash
will start investing in servers, software and Facebook. Part-timers may get
their hours back, but higher productivity from technology doesn’t necessarily
mean a hiring binge.
So here we are:
Reality #1: Colorado’s employment peaked in mid
2001 with about 2.26 million employed in non-ag sectors. That’s straight from
stats assembled by CU Business Research Division Managing Director Gary
Horvath. Then it took 55 months —
fighting through a recession with economic development programs and a lot of
hard work – to get back to that number in early 2006. In a final burst of good
times to January 2008 (Remember then? You were buying stuff.), the state non-ag
employment reached about 2.38 million.
Guess where we are
today? In April employment sunk all the way back to 2.26 million – those hard-fought job gains of the past
seven years vanished. Employment is not as low as when it bottomed in early
2004, but the past year took a terrible toll.
Reality #2: U.S. unemployment sits at 9.5
percent; Colorado’s at about 7.6. Anyone who tracks the jobless knows numbers
lag reality. President Obama says double-digit unemployment is coming. In
recessions, many just give up looking for work, falling from the unemployment
radar. U.S. News & World Report editor Mortimer Zuckerman reminded us in
his column “The economy is even worse than you think” that employees are taking
unpaid leaves and being forced into part-time positions.
Reality #3: Colorado’s recent job stats from
CU’s Business Research Division were dismal at best. We’ll lose 55,000 to
65,000 jobs this year even if things get a little better, Wobbekind says. The
only sectors dodging big cuts so far have been government and health care. But
municipalities face plummeting revenues from both retail sales and property
construction workers are engineers, lawyers and computer system designers.
Throw in layoffs in travel and leisure, manufacturing, retail and information
businesses, and it’s one big train wreck, cars piling into one another.
I posed my doubts
of a “jobless” recovery to friend Carl Hunt, a semi-retired economist who still
consults in the wind energy field (another promising green business hammered by
low natural gas prices).
He gave me four
keeps on climbing, maybe to 15 percent or higher. Prices drop even more. Some
are worried this will be a “double-dip” recession. Not politically acceptable.
steps back in again – big time. Another huge incentive program more directly
tied to job creation vs. what we got the first time. One problem. The U.S.
deficit has reached a record $1.08 trillion. Obama forecasts it will reach
$1.84 trillion for the fiscal year ending in September. “The pushback is very
strong against more deficit spending,” Hunt says.
incredible new technology discovery is made – like an electric car battery that
runs for thousands of miles without a charge. Not likely.
Four, the global
economy heats up faster than anyone predicts, and exports help dig us out of
Despite some Ponzi
schemes here and there, Hunt says it’s the wealthiest people in the country who
remain the most unscathed by the recession. But it’s the middle and lower
classes that must get real jobs to rescue GNP.
Hunt agrees with
Wobbekind that a recovery is slowly starting. But unlike past recessions, the
consumer is unable to borrow his way out of this one; credit is still “hell.”
Who’s to say if a
“jobless” recovery is all hopeful optimism? What do you think?
2009 will always be the year of the Boulder Sesquicentennial for me, for little did I know that when I first attended a community meeting last year that I would become so involved in helping celebrate Boulder's 150-year history.