The New Normal Sucks
Economists are beginning to wonder if this very slow economic recovery isn't permanently altering the landscape.
Economists are beginning to wonder if this very slow economic recovery isn’t permanently altering the landscape.
NYT (“Slump Alters Jobless Map in U.S., With South Hit Hard“):
The once-booming South, which entered the recession with the lowest unemployment rate in the nation, is now struggling with some of the highest rates, recent data from the Bureau of Labor Statistics show.
Several Southern states — including South Carolina, whose 11.1 percent unemployment rate is the fourth highest in the nation — have higher unemployment rates than they did a year ago. Unemployment in the South is now higher than it is in the Northeast and the Midwest, which include Rust Belt states that were struggling even before the recession.
Now, with the concentration of the highest unemployment rates in the South and the West, some economists wonder if it is an anomaly of the uneven recovery or a harbinger of things to come. ”Because the recovery is so painfully slow, people may begin to think of the trends established during the recovery as normal,” said Howard Wial, a fellow at the Brookings Institution’s Metropolitan Policy Program who recently co-wrote an economic analysis of the nation’s 100 largest metropolitan areas. “Will people think of Florida, California, Nevada and Arizona as more or less permanently depressed? Think of the Great Lakes as being a renaissance region? I don’t know. It’s possible.”
The reordering of the nation’s economic fortunes can be seen in the Brookings analysis, which found that many auto-producing metropolitan areas in the Great Lakes states are seeing modest gains in manufacturing that are helping them recover from their deep slump, while Sun Belt and Western states with sharp drops in home values are still suffering. The areas that have been hurt the least since the recession, the study said, rely on government, education or energy production. Places that were less buoyed by the housing bubble were less harmed when it burst.
I live in the DC metro area, which has been among the least hard hit in the country. But government can’t employ everybody; someone has to pay the taxes that enables it to function. And, while education may or may not be the engine that drives the next economy and gets us out of this mess, it’s actually just a subdivision of government. That leaves “energy,” which has been a boom and bust niche for a hundred years or more.
Even the modest recovery in the American auto industry is government-driven–and arguably an illusion. It wouldn’t have happened without massive taxpayer funded bailouts and restructuring of crippling obligations. But there’s no guarantee that they’ll manage the situation any better this time.