Last night, as I sat nursing a nearly warm stout and picking at the last bits of a charred creole burger in a local sports pub, a cross-legged CNN reporter flashed her inane smiles and asked her inane questions of former president Bill Clinton on the television suspended on the wall above my head. At one point, the text bar flashed something like: "Economy will recover in three years, says former president," or some such statement. Essentially, Clinton was telling us that everything would be all fixed up by the time (conveniently) we arrive at the next presidential campaign season.
Anyhow, the prediction got me thinking. Or, to be more specific, the pretension to make such a prediction got me thinking. Meteorologists can't accurately give you the weather ten days out. Weather is subject to a little thing called chaos mathematics. Chaos. Ditto, economics. So how does this guy have it all figured out, and how is he fixing the date for us?
Over the past few days, in my perusals of our two area metropolitan newspapers—the Buffalo News and the Democrat & Chronicle—I've noted a surfeit of articles on folks making claims about the character, depth, meaning and longevity of our current recession; in particular, the recession and its affects on the economy of Upstate New York. So what I thought to do was put together a sort of pastiche, culling fragments from six articles that appeared this week in these two publications. Then we can take a look at them, side by side as it were, and see if we can't get a better look at any truths that may be lurking in the shadows.
We'll start with an article we referenced yesterday from the Buffalo News. It's about Robert Wilmers, chief executive officer of M&T Bank Corp., who claims that upstate needs "big projects" to help drive its future growth. Here's what Wilmers has to say about the recession in particular:
Wilmers was asked when he believed the recession will end. “The recession will last for a long time, and I don’t think 2009 will be a good year economically,” he responded.
An article from the Democrat & Chronicle (Tuesday) backs that claim. Not only are we now officially in our 13th month of the recession, but we New Yorkers will likely remain much longer in the grips of the recession.
New York officials and economists are wondering if this downturn will hurt the state for a longer period than the nation feels pain. Data from the state Department of Labor show that the two most recent U.S. recessions, which each lasted eight months, started sooner and lasted later in New York, costing 545,000 jobs between 1989 and 1992 and 330,000 jobs between 2000 and 2003.
Our factory production would also indicate that we're headed for a long hard slide. From a Buffalo News article (today):
“The manufacturing sector is in a recession,” said Mikhail Melnik, a Niagara University economist.
With the nationwide financial crisis causing consumers to tighten their purse strings and companies to hold back on spending, Melnik said he does not expect a quick turnaround by the local economy.
“The situation is expected to worsen over the next several months,” he said.
If you think that's bad. According to another article in the Buffalo News (today), it's only going to get worse.
The U. S. service sector shrank far more than expected in November, as employment, new orders and prices plunged, hurting retailers, hotels and airlines. Meanwhile, Americans hunkered down heading into the holidays, forcing retailers to ring up fewer sales and factories to cut back on production.
The Institute for Supply Management’s closely watched gauge of activity in service industries, where most Americans work, showed that for every company adding jobs, eight cut payrolls last month. That ratio led some economists to boost their forecasts for layoffs for November to levels not seen since the early 1980s.
As for the unemployed, expect to see many more of them over the next year. With the jobless rate expected to hit 6.8 percent by the end of the week, analysts are predicting that we'll see an increase to near 9 percent by this time next year.
But wait a second! We've got another prediction. From this same article:
“I am looking for this recession to last 18 months, ending in June,” said David Wyss, chief economist at Standard & Poor’s in New York.
Eighteen months! But Bill Clinton said three years. As for "New York officials," they seem to expect this sucker to pick up more steam as we head into the New Year. Plus, we've got Wilmers telling us that we're in it for at least another year or more.
But we're shopping. Or... at least, we were on Friday. An article in the Democrat & Chronicle (today) is literally entitled: Shoppers forgot about recession on Friday. This first line especially is worth a laugh, which may have even been intended:
The economy has officially been in a recession for the past 12 months, but apparently no one told Black Friday about it.
We even spent an average of $25 more per shopper than last year—which, at this time, it ought to be pointed out, was also in recession.
Bargains prompted many to buy more than usual. Spending more during the big sales — some New York retailers offered discounts of up to 60 percent off normal prices — can mean saving money in the long run.
"I'm always the bargain shopper, and this year this is our Christmas present" said Kerry Bryan, 28, of Chili, who bought a $600 television at Best Buy on Friday morning for herself and her fiancé. "If we get it early, it's just a bonus."
A $600 television! Is that really the purchase of a recession-stricken American? And she even calls it a bonus! We're expected to near double digit unemployment rates by the end of next year, and we've got people spending hundreds of dollars on luxury items. Maybe things aren't that bad.
One guy is willing to go out on a limb and say just that. This is from another article that appeared in the Democrat & Chronicle (yesterday).
Charles Plosser, president and chief executive of the Federal Reserve Bank of Philadelphia, said growth should resume in the second half of 2009, though overall economic expansion for the year will be tepid, probably falling short of 2 percent.
Plosser forecast that the national unemployment rate, currently 6.5 percent, will rise above 7 percent in 2009.
But the former dean of the Simon school at the University of Rochester said he does expect a turnaround to begin late in the year.
"The housing sector should finally (hit) bottom and the actions taken by the Federal Reserve and the Treasury will gradually help financial markets return to some semblance of normalcy," Plosser told the audience at the Hyatt Regency in downtown Rochester.
So, things should start looking rosy again come Christmas time next year. Oh, except for the more than 7 percent of the population who will be out of work.
I don't know, folks. We've got a lot of information here. A lot of different people telling us a lot of different things. Who do we believe? Any of them? Does the guy falling off his barstool on the other end of the bar any less qualified to make predictions than Bill Clinton or Charles Plosser or "New York officials"?
Check back later today Friday for our look at the credit crisis here in Genesee County.
