- Last Updated on Wednesday, 03 August 2011 00:00
- Published on Wednesday, 03 August 2011 00:00
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It’s not a depression, the economic situation in our country isn’t grave enough for that designation, but it could well be called the recession that never ends.
Technically, if you go by the book, a recession is when the nation’s gross domestic product, the sum of all we make, produce and spend, declines two quarters in a row. By this definition the recession ended in 2009. However, with sluggish growth, high unemployment and a continuing decline in housing prices, it sure doesn’t feel like it. For many, the “recovery” is just a nice word they use in Washington. The reality
is that the recession has been going on for almost three years.
The most telling statistic, and the most painful, has been unemployment. Last month, instead of going down, as many in Washington hoped it would, it went up by a tenth of a percent. Nobody is quite sure what to expect in July. The crisis over the deficit cap has made business nervous; they worry about higher interest rates, perhaps higher taxes, and many, possibly, have put off hiring or expanding. Lower fuel costs have helped, but the price of gas hasn’t gone down enough to jump start the economy.
The betting is almost even. One economic research firm I consulted with says the jobless rate will go up, another says it will go down. There is an economist joke in there somewhere. However, both had one thing in agreement, it wasn’t going to go up or down by much, and both agreed that there wouldn’t be any significant downward movement for quite some time to come.
One other economic statistic that remains disturbing is called by the folks at the Bureau of Labor Statistics, U6. It sounds like an ominous code name for a secret military action, or perhaps some new disease, but actually, it’s another kind of measure for unemployment. Overall, based on the Department of the Census’ information (they actually collect the unemployment data, while the Bureau of Labor Statistics analyzes it) the number we hear in the news reports, U1, only represents those people looking for work who have been unemployed for 15 weeks or longer. U6, the number that’s rarely released, is more chilling. It includes discouraged workers, those who live in places so economically grim it isn’t worth looking for work, marginally attached workers, and part time workers who would like to be full time. This number probably tells the story best, and right now it’s 16.4 percent.
Another economic surprise last week was the revision of the estimates of the growth in the Gross Domestic Product. Instead of turning in a robust performance, as many had hoped, GDP growth for the second quarter was an anemic 1.3 percent. That’s not good, but even worse was the revised estimate for the first quarter. Apparently the U.S. economy only grew by 0.4 percent. That’s barely moving and even though the second quarter was better by comparison, both numbers look more like what you would see for an economy courting with a return to a full-scale recession rather than recovering from one.
However, there is some good news. While the rest of the nation’s economy is in dire straits Virginia is making a robust recovery. Unemployment this time last year was 6.9 percent. The data for May of this year, the most recent available, showed 6.0 percent, a distinct improvement, and the trend seems to be continuing to edge downward.
That’s not to say every county did so well, but in our area there was good news across the board.
While Virginia may be an oasis in economic hard times, nationally, the situation isn’t good, and we’re still waiting and hoping, with apologies to Herbert Hoover, that recovery may be just around the corner.