It's a confidence issue.
Now that the obscure committee that decides these things has announced that the Great Recession is over, and has been for 15 months, things should start getting better.
Instead, things are getting worse. Not worse-worse but worse than they should be and worse than the economists were predicting it would be by now.
The reason appears to be that the Business Cycle Dating Committee thinks the recession ended in June 2009, but the American people disagree.
During last week's meeting of the state Economic and Revenue Forecast Council, a chastened state economist reported that "consumer confidence remains in recessionary territory." And if consumers think we're still in a recession they are less likely to spend and more likely to save. Arun Raha reported that the savings rate among Washingtonians is much higher than he thought it would be and credit card use is falling at a rate of 10 percent a year.
Both are economic virtues unless you have an economy and a recovery that is dependent on consumers and businesses spending again. That spending would trigger manufacturing, trigger sales and trigger sales tax and real estate excise tax collections.
But when people see their wealth fall with the value of the houses and their retirement accounts, they get skittish. When they lose their jobs or see others lose their jobs, they retrench. And until they see the unemployment rate fall — the most reported and understood economic indicator — they'll stay in that trench.
Some will never leave it.
"Like with the Great Depression, there will be one generation that will change its spending habits forever," Raha said.
Don McLean talked about the debilitating effect of reporting uncomfortable truths when he sang: "Bad news on the doorstep. I couldn't take one more step." Given that I have written about the ill effects of the recession, I guess I am partly to blame for your lack of confidence.
Maybe if we got some good news about the economy, everyone would feel happy and start buying things again. To that end, I went through Raha's economic report in search of positive facts and trends.
Here goes (please don't notice that none involve construction, real estate or tax collections, and try not to pay attention to the fact that most good news is tempered by qualifiers):
"Average hourly earnings were up 6 cents to $22.66, only 1/7 percent over a year ago. The manufacturing workweek increased by 0.1 hours to 40.2 hours."
"The risk of a double-dip recession has increased but we don't expect it to happen."
"Credit conditions for small business are improving but remain tight."
"Washington export growth is slowing, but will help the state outperform (the nation) in the recovery."
"The asset quality of Washington regional banks is improving."
"As is the case nationally, the recovery in Washington is likely to be led by the manufacturing sector. The National Association of Purchasing Management's Western Washington Index, which measures strength in the manufacturing sector, rose to 58.6 in August from 55.9 in July. Values above 50 indicate expansion."
"The Western Washington Index has now indicated growth for 13 consecutive months."
"We remain optimistic about the outlook for the aerospace industry in Washington. Boeing navigated the recent recession with only minimal job cuts."
"After the unprecedented Microsoft layoffs in 2009, the state's software sector has returned to growth."
"Washington's personal income is now growing moderately. From the first quarter of 2009 through the first quarter of 2010, total personal income grew 1.2 percent despite a 3.6 percent decline in employment."
"We should see income growth picking up now that positive, albeit weak, job growth has resumed."
"Household net worth is on the mend but still well below its peak."
"It now appears likely that inflation will be close to zero in 2010, picking up in 2011, 2012 and 2013."
There. Don't you feel better now. How about you go out and buy something. Like a house. Or a car. Or a pizza.
Read more: http://www.thenewstribune.com/2010/09/21/v-lite/1350014/sometimes-you-need-a-backhoe-to.html#ixzz10HbilxTH