The recession is over, but nobody’s partying
It’s official: The Great Recession is over. Yippee. Now … does anyone actually feel as though the effects of the economic downturn have yet relented?
Perhaps Bob Reece, president of Advanced Title Co. in Grand Junction and a long-time observer of the Grand Valley real estate industry, put it best. And I’ve since heard others quote him. “Whoever says the recession is over can’t be living in this neighborhood,” Reece said.
In point of fact, the Business Cycle Dating Committee of the National Bureau of Economic Research says the recession is over.
According to the committee, a group of economists that serves as the official arbiter of recessions, the latest downturn began in December 2007 and ended in June 2009. At 18 months, that makes the Great Recession the longest economic slump since World War II, longer than two 16-month contractions in 1973 to 1975 and 1981 to 1983.
But even as the committee declared an end to the latest recession, the group didn’t go so far as to suggest substantial economic improvement and stated so in its report: “The committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity.”
That’s an assessment more in line with what most business owners and managers experience in their day-to-day operations, although they’d likely use more colorful language.
So if the economy at least isn’t getting any worse, when will it get appreciatively better? As usual, the answer depends on who you ask.
The Federal Reserve forecast in June the U.S. economy will grow 3.5 percent in 2011. But Federal Reserve Chairman Ben Bernanke since has suggested the Fed could revise that projection downward. While many private-sector economists expect the economy to grow 2.8 percent next year, there are also those who believe another recession will start before the labor market recovers.
In Colorado, two monthly indexes tracking business conditions offer mixed results. The Vectra Bank Colorado Small Business Index has climbed to its highest level in a four years, a reflection of what economist Jeff Thredgold describes as a transition from serious recession to modest growth. Meanwhile, though, the Business Conditions Index for Colorado has slumped to its lowest level in nearly a year. The index sill forecasts expanding economic conditions, but at a slowing pace.
Here in the Grand Valley, the real estate market remains down even as property foreclosures increase. But there are also some encouraging economic indicators. The two biggest issues remain the same: sales and jobs. Businesses have a hard time hiring more employees until sales increases. Fortunately, there’s some good news on both fronts.
The City of Grand Junction reports that sales tax collections, a direct reflection of sales, have increased three straight months compared to the same months last year. Of course, year-to-date collections for 2010 continue to lag behind 2009, but an upward trend is far preferable to the alternative.
As for jobs, the Mesa County Workforce Center in Grand Junction reports an increase in the pace at which job orders posted there are filled. While about 160 job orders are posted at the center on a given day, those jobs usually are filled within a month. One job order can involve more than one vacancy. At the current rate of turnover, about 2,000 vacancies will be filled over the next year. Only a few months ago, the pace was closer to 1,200 jobs a year.
Another measure of the labor market in Mesa County, the monthly unemployment rate, fell to 9.3 percent in August. The latest rate is two-tenths lower than July and three-tenths below August 2009.
So without the one-armed economist President Harry Truman famously demanded, the economic outlook likely will remain muddled for some time. On the one hand, the recession is officially over. On the other hand, unemployment rates remain high as millions of people search unsuccessfully for jobs.
Thankfully, there’s yet one more factor to consider that’s less objective, but equally important: the dogged determination of small business owners and managers to succeed. Regardless of whether the recession is really over or not, small businesses continue to persevere and find ways to overcome obstacles. And that is something worth celebrating.
Phil Castle is editor of the Grand Valley Business Times. Reach him at 424-5133 or firstname.lastname@example.org.