New Geography

Tag: Recession

  • Report on the Jobless Recovery: 18.7% Effective Unemployment Rate in May

    Is the recent talk of “green shoots” coming out of this recession realistic? A recent report from the New America Foundation outlines the strong likelihood of a jobless recession that “could perpetuate the crises in the housing and banking sectors and prevent a sustainable and healthy economic recovery.” A jobless recovery will prevent the wage growth necessary to stimulate business investment, maintain consumption, and pay down debt.

    The report outlines a constructed measure of effective employment: BLS’s measurement of unemployed, 2.2 million marginally attached workers, and 9.1 million workers employed part time only because they can’t find full time work plus another 4.4 million Americans who want to work but gave up the search over a year ago. This results in an 18.68% effective unemployment rate.

    Other highlights from the report:

    • The US economy must add 125,000 jobs per month just to keep pace with population growth.
    • Employment growth is further hindered by continued productivity gains through this recession.
    • As of Q1 2009, only 27% of employers experiencing mass layoffs anticipate rehiring some of the displaced workers.
    • The most severe unemployement and job losses are occurring in sectors comprising the productive economy, precisely the sectors that must grow to shift from the debt-financed growth of the recent past to growth driven by production and consumption made possible by rising incomes.
    • Mass unemployment is now fueling home foreclosures on prime mortgages: 5.7% of prime fixed-rate loans were overdue or in foreclosure last quarter, up from 3.2% a year earlier.

    Read the full report at New American Contract and check out the NAC’s Value Added blog.

  • Economic Resilience in Rural America?

    This week Reuters is hosting a Food and Agriculture Summit in Chicago. On Tuesday presenters, including leading agribusiness executives and business economists, reported that despite the challenging global economic climate, the U.S. rural economy has weathered the recession better than most sectors due to steady demand for agricultural products, stable land prices and healthy credit lines for farmers”.

    Jim Borel, a VP at DuPont Co stated that “fundamentally, food demand is there,” as “people need to eat,” which “helps to stabilize things.” According to Reuters such claims were echoed by other participants, including Mark Palmquist, CEO of CHS Inc, who noted that the world keeps “adding mouths to feed,” and that “food demand… tends to be pretty insensitive to what the global economy is doing.”

    While there appears to be some anticipation of stability at large agribusiness corporations, such optimism may be tempered among farmers, who have seen commodity prices drop by 50% or more over the past year. Such drops will create a more difficult business environment for producers. However, there is some hope that the strong prices received by farmers over the past couple of years will make them better able to, as one agricultural official in Wisconsin stated recently, “ride it out for somewhat longer than otherwise would have been the case”.

  • Even the Super Bowl Can’t Defend Pittsburgh From a Recession

    Somebody call the New York Times. The national economic meltdown has finally come to Pittsburgh, a city-region where you’ll want to be on the day the world ends because you’ll still have several years to live.

    Sunday’s Super Bowl game between the mighty Steelers and the upstart Arizona Cardinals – teams representing regions going in exactly opposite socioeconomic directions since 1950 – has eclipsed all non-sports news coming from Pittsburgh.

    Pro football, which Pittsburgh continues to excel at despite 60 years of economic decline, brutal population loss and criminally inept public sector mismanagement, is a seasonal religion every fall no matter how well the Steelers do. But when the Steelers make it to the Super Bowl, as they did this year for an NFL record seventh time, the region and its 2.3 million people are paralyzed by a religious fervor that can be culturally embarrassing.

    “Go Stillers” signs appear everywhere. Secretaries, retail clerks and TV news anchors wear black-and-gold Steelers garb on game Fridays and during the playoffs. If Ben Roethlisberger game jerseys had collars, an embarrassing number of professional men would wear them under their suits. The Pittsburgh public schools have instituted a two-hour delay Monday morning in an effort to thwart what should be a severe epidemic of the usual morning-after-Steeler-Sunday-night game flu among teachers. Eat n’ Park, a venerable and highly profitable family restaurant chain that ordinarily wouldn’t close if a meteor struck downtown Pittsburgh, has won enormous goodwill because it’s decided to close at 3 p.m. on Sunday so its several thousand employees can not only watch the Super Bowl but have several hours to prepare the sacred sandwiches and dips and dress up for it. If the Steelers lose, the whole town will be on a suicide watch till March.

    Even the Steelers’ success on and off the field could not defend Pittsburgh from the recession forever, however. For the last two months national publications that should have known better (like the Times) came to Pittsburgh, looked around at its service sector-university-government economy, and declared that it was some sort of model for other city-regions because it was apparently recession proof.

    Of course, reality turned out to be not so kind. Pittsburgh’s unemployment rate and stable housing prices were relatively better than the national figures only because its deindustrialized economy was already so stagnant that it never experienced fast job growth or a recent real estate boom and therefore couldn’t go bust.

    The latest regional numbers, as reported by PittsburghToday.org, a useful web site devoted to documenting the economic reality of the Pittsburgh region as well as boosting it, showed job losses accelerating in December for the second straight month.

    Compared to December of 2007, Pittsburgh had 7,500 fewer jobs in December 2008. November’s revised numbers, according to PittsburghToday’s Harold Miller, showed a net loss of 1,600. These numbers, while negative, are minuscule in a region with over 1.1 million jobs. In December jobs were up slightly year-over-year in health care, higher education, professional and business services, mining and construction, Miller reported, but about 10,000 lost jobs in leisure and hospitality, retail and manufacturing offset those gains.

    Miller, per usual for a professional civic booster, looked for and found a few relative silver linings in Pittsburgh’s permanently gray clouds: The job loss – 0.6 percent in December – was small compared to Detroit, which has lost 5 percent of its jobs in the last year. And compared to Cleveland – Pittsburgh’s rival in all things, including pro football, population loss and the rate of post-industrial economic decline – the former Steel City did better.

    The capital of Steeler Nation lost only 1 manufacturing job in 2008 for every 5 lost by the Cleveland, a city whose hapless Browns finished 4-12. But even if the Steelers – who are narrow favorites – whip the Cardinals Sunday and win their sixth Super Bowl in seven tries, it won’t do much to protect Pittsburgh from eventually being hurt harder by the national recession/depression.