If it Doesn’t Walk or Talk Like a Recovery, It’s Not a Recovery
Back in August of 2009, I wrote “Let the Recovery Begin”. The recession now having been declared over in July 2009, makes my declaration of recovery off by a month. While I qualified my forecast for a strong recovery as being another jobless recovery and tempered by state and local budget crises, I did think that the duration of the recession would create a greater bounce. Pent-up consumer demand, I thought would lead to a more vibrant recovery. At the time, an old friend wrote to tell me exactly how wrong I was. I may claim now a technical victory, but he was certainly correct. My head was definitely exactly where he said it was.
I took my wife out to dinner for her birthday at a business club. Being a Thursday and the last day of the month for one-quarter of the members to reach their food minimums, I suspected quite a crowd. As we were shown to our table, I asked her if she had any idea how much it cost me to buy out the entire dining room for this occasion. We were the only ones there. Awkward, eventually a few more tables were seated, but it did not look like we were more than a year into an economic recovery.
Last week a very nice grocery store near our home announced it was closing. It was a large store with high quality produce and meats, gourmet cooking items and an impressive wine selection. It is admittedly difficult to compete against the large chains in the grocery business, but the store had been there for seventeen years. Again, another couple of dozen people unemployed and long lines of people clearing the shelves of inventory at a twenty-five percent off sale didn’t look like a recovery.
My only client seeing boom times does bankruptcies and mortgage modifications. Others have gone bankrupt, have had their venture capital funding pulled or are chewing through their retirement savings trying to wait out the stealth recovery.
It may be cynicism brought on by the election season and the accompanying negative advertising blitz, but I think the recovery is a hoax. Corporate earnings and the stock market may be up, but the economy is not growing fast enough to put the millions of unemployed back to work. The economy is not generating enough new jobs to absorb the new entrants to the workforce.
Young adults looking for jobs aren’t finding them. They’re competing with displaced workers with experience willing to take dramatic pay cuts to get back to work. That’s a tough spot to be in. In an even tougher spot are those people over fifty looking for work. To the extent that discrimination exists in hiring, age trumps them all.
With the official unemployment rate at around 10% and the unofficial rate that would include those that have given up and those under-employed topping 17% we are still in deep weeds economically. The real recovery will not begin until the economy is consistently creating over 200,000 jobs a month. Until that time, the number of unemployed will continue to grow and the recovery will remain in stealth mode.
Richard Gabel
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