Wanting a better picture of the American economy? Me too.
Last week President Barack Obama triggered a firestorm of criticism – even from many of his allies – when he tested the argument that the private sector is doing “fine”. Here’s his full quote:
“The truth of the matter is that, as I said, we’ve created 4.3 million jobs over the last 27 months, over 800,000 just this year alone. The private sector is doing fine. Where we’re seeing weaknesses in our economy have to do with state and local government”
On first blush, it sounds like nonsense. A big majority of Americans think the country is moving in the wrong direction, according to pollsters, and the headlines are full of economic woe.
But set against the general mood are other counter-indicators. We know that corporations, banks and big businesses are sitting on big pools of cash, afraid to invest and expand (we’re told) because of uncertainty in Europe.
There are also plenty of grassroots signs out there that the economy isn’t in anything like the deep slump that we were seeing in ’08 and ’09. Unemployment has inched downward, particularly in pockets of the country.
I know this is purely anecdotal, but I was out and about over the weekend and I saw swarms of Average Joes and Janes roaring around on high-dollar motorcycles — part of the Americade celebration in Lake George.
I was also in Burlington, where Church Street was packed for the final day of the jazz festival, and the shops and restaurants were bustling.
Even tiny Westport NY was busy, with more shops reopened, and plenty of customers hustling in and out. Are these the trappings of malaise?
So here’s what I would like: I’d love for someone independent to paint a really accurate, detailed portrait of the state of the economy as it exists today.
Not what we fear might happen. Not our mood or our sentiments. Not our anxieties. I’d like to know what is actually happening out there for retailers, factories, small farms, workers, and so on.
We know, for example, that unemployment remains at 8.2%. But a quick glance at the numbers reveals that the details are really complex and textured.
Some parts of the country have much higher unemployment than others. And some groups (blacks, Hispanics, teenagers) are suffering far higher and more persistent unemployment than white men and women, or Asians.
(The Watertown Daily Times grapples with some of this in an editorial this morning.)
I know that the politicians aren’t interested in this kind of shades-of-gray narrative. The Democrats want a simple “things are getting better” story.
Republicans want us to think that so long as a Democrat is in the White House we’ll keep teetering on a cliff.
But I suspect that the reality is more interesting, with slices of hopeful information, and some elements of real concern.
In particular, I’d like to know a lot more about the persistently unemployed, the 5.4 million Americans who are going half a year or more without finding jobs. (This accounts for about half of all jobless.)
Who are they? Why aren’t they faring better, even when compared with other jobless folks who are finding a way to get back into the economy?
Again, I know this is anecdotal, but let me end with a question:
Tell us what you are experiencing. Not your fears or anxieties, remember, and not your political sentiments, but your actual experience. How are you faring in the 2012 economy? How’s your business doing?
Are you getting more hours at work? Do you have a little extra money in your pocket, or are you barely squeaking by? As always, comments welcome.
It is a very complicated picture.
My business largely depends on the construction sector and my work usually lags about a year or two behind the point a customer draws plans for a new project. Last year was very slow but we saw the slowdown coming and planned our year to develop new products and create some inventory that will we sell in the future. We took time during the slowdown to take care of some long delayed construction projects around our own properties.
Over the last couple of years we have seen a transition from big new projects – mostly large vacation homes and some commercial work – to lots of smaller jobs, people doing improvements around their own home just as we are doing ourselves.
We have found materials prices over the last few years to be volatile and some suppliers started charging for deliveries about two years ago that previously would have been free. In that same time period we started seeing suppliers cut back on inventory. 3 or 4 years ago we could call suppliers up and order nearly anything from their catalog and have it shipped the same day. Now many of them are placing items on back order because they don’t keep as much inventory on their shelves. Same with industrial/contractor tools. I needed to replace some worn out equipment and went to my local supplier who used to carry lots of choices. Not so much anymore. He said that last year was so slow for tool sales that retailers have reduced inventory and manufacturers have responded by limiting manufacturing which leads to increased price. Probably people are more price conscious and are going to the internet to buy expensive items, too.
Over the last year or so I have found that customers are much slower in paying. People who used to cut a check on delivery are taking 30 days, or more. Right now I’m sitting on a substantial pile of accounts receivables which means I’m not replacing tools until I get paid.
On the bright side business is up from last year and we’ve had jobs that we quoted last year but never heard from come back this spring and say they are ready to buy. We spent time while it was slow last year making improvements to our workspace and installing some large tooling that will make us more efficient and about a month ago we got a check from a customer I had written off as a loss last year. Suppliers are telling me their business is better this year too. Not great but looking more hopeful. And their truck drivers are confirming the same thing. Many of the drivers were on short weeks last year, even after rounds of lay-offs, but they are back to full work weeks.
I think the economy would cascade for the better if everyone just decided to replace inventory.
“But I suspect that the reality is more interesting, with slices of hopeful information, and some elements of real concern.”
Brian. this is pretty much what I have heard reported from people who seem to know what they are talking about.
By no measure is the economy (at least the private sector as a whole) doing “fine”. When you step in it as a politician it is hard to scrape it off your shoe.
Personally I am doing fine. Business is achingly slow. I wouldn’t have time to follow this blog if it wasn’t.
Also, businesses sitting on cash is not a “counter measure”. The main problem is still that both consumer and business confidence remains far too low.
Corporate profits are reasonably strong and the stock market has done well. Private sector hiring has been steady and recovering. The problem has been public sector employment. That, presumably, was Obama’s in-artful point.
Peter, yes that was what he meant. I got it, you got it. But he should have said it more like you did. Artfully as you say. As far as private sector hiring recovering we have such a long way to go. A whole lot of employees just graduated.
What Obama said is accurate.
Things are not booming but the private sector is doing better than the public sector.
It is almost funny that the Republicans don’t like what Obama said when it is the Republicans who have been pushing for a smaller government at all levels and have been successful in doing so by forcing many who work for the government out of a job – except of course for themselves who want to keep their jobs (congressmen and senators) – and will spend gobs of other peoples money to keep their jobs and their huge pensions and health care benefits.
Brain, It is kind of funny. You say you want a clearer, less biased, picture of the economy than you ask for more anecdotal information all of which can be hooey. My friend who owns a B&B in the Adirondacks says that he is maybe going to have one of the best summers he has had in years based on the reservations he has for July. But again maybe I just made that up (I didn’t)!
Knuck’s description of his (?) business situation was excellent.
Lots of shiny, new, loud, motorcycles on my road, too.
Personally, as a (unionized) public health care sector academic employee, the only real effect has been that public research dollars are harder to come by.
My two sons just getting started have good jobs. One has a job managing the database for a financial services company that tracks and de-constructs “toxic assets”. That company is doing very well indeed. The other is a doctor. Their generation is having a tough time, at least according to the news, but most of the ones of that generation that I know have done ok.
Paul – You’re right. I don’t have the resources to answer the real questions that I posed. But I do think it’s interesting to ask people to think out loud about their economic lives outside the usual paradigm of politics and anxieties. And I’ll admit to a certain disconnect between what I experience in my personal circle of friends and family and what I see on the news. A lot of the people in my world are doing pretty darn well. Many, many aren’t getting rich, but they’re living okay, enjoying some luxuries, and so on.
If I had to point to the one place where I hear the biggest concern, it’s the lack of available/affordable health insurance.
–Brian, NCPR
This blog reminded me of an old Simpsons episode. It is one where Bart gets hit by a car being driven by Homer’s boss Mr. Burns. Homer gets this shifty lawyer to put together a frivolous lawsuit in an effort to fleece his boss. When they are deposing Bart for the trial they ask him how he is doing, he responds “fine”. The layer then yells at him “you are not fine, you are in constant pain!!”. Bart tries again and this time he says “I am in constant pain”. This kind of what some people think that republicans are trying to do. The question is, is it spin, or is it “fine”?
My suspicion — and this is just me contributing to the noise of anecdotal stuff out there — is that things are actually really “fine” for a lot of us.
Especially if you’re white, have some post high school education, and are between the ages of, say, 30 and 55.
And if you don’t live in Nevada, Michigan and one or two other really hard-hit states.
One of the troubling aspects of our discussion is that we so rarely acknowledge this patchwork quilt aspect of life.
What would happen if congress really sat down and said, “Okay, who’s actually really hurting the most and how/what can/should government do about it?”
I think the conversation might be very different than the one we keep having.
-Brian, NCPR
Brian, I agree with you we do not hear enough from those that are really affected by a crummy economy. I certainly don’t.
Its more of a “I feel your (constant) pain” situation for Obama and not fine spin for Romney.
The vast majority of my friends and family were barely touched by this “crisis” and are doing just fine.
Out of a 100+, or however many people, I would consider close acquaintances, I can think of only 1 who lost a job during the initial downturn… and he happens to be the only friend I have who is unemployed at the moment. He was a financial sector employee, and doesn’t seem willing to take a “lesser” job, so I suspect he will remain unemployed for a while still.
In fact, the only people I know who are even concerned about their jobs are public sector employees. Cops, teachers, etc.
I don’t know a ton of business owners personally. Only about dozen, maybe a little more, and out of that group only one of them has called it quits. That was unrelated to the larger economy and he found what is arguably a better job. The rest of them are still at it, doing just fine, and a few of them are coming out of the “crisis” better than they were before.
I see packed trailheads, lakes, and roads when I venture around the Adirondacks.
All anecdotal, for sure, but in my small world things are just fine – and have been all along.
So I have trouble reconciling what I hear and read in news outlets with what I am seeing and experiencing… heck, now that I think about it, I have trouble reconciling what I hear and read in news outlets with what I hear and read in news outlets. On one hand we hear about record profits, on the other hand we hear about a financial crisis.
Brian, again I agree. I also think that if you sit down with those folks they are going to more likely support short term economic fixes that are being suggested by the more right leaning republicans. If you ask a guy who needs a job building a pipeline what he wants, I doubt he will tell you that he supports long term strategy for finding alternative energy sources that would make the pipeline job unnecessary. Things like that. In that sense those politicians are doing what those constituents want. But you are right that persons opinion should factor into what we do as a country.
my wife, now retired, is helping a friend by editing web-site “posts” by the unemployed. There are some pretty sad stories out there.
While the economic recovery is poking along and much of the North Country seems to have avoided the worst of the downturn, I do think a fair bit of economic insecurity is still in the air for some folks. Certainly for some public employees like teachers who may continue to face budget cuts. And some private sector workers I know are concerned about their jobs if we go back into recession. But for the most part we don’t seem to have the extremes of the boom and bust cycles that other areas of the country go through.
I have a relative in the Chicago area who was doing a lot of independent legal work for a very large international manufacturing corporation. Post recession, they started doing all their work in-house, and he admitted to me recently that he is now involuntarily semi-retired.
On the other hand, my neighbor just told me that the owner of the famous Crystal Springs Ice Cream stand, outside of Saranac Lake, told him that it had had it’s best Memorial Day Weekend ever. That’s about 60 years.
Man I could go for one of those chocolate and vanilla twist form that IC stand right now!
Pistachio.
I’ve been retired for ten years which I think qualifies me to comment from that perspective. I converted my 401K assets into an IRA at retirement and saved an invested during my earning years. The income from those investments along with social security income leaves me comfortable. I am not representative of all retirees however. I have many friends my age (over 70) who have lived their lives in fear of the markets and thus have depended in years past on income derived from bank CDs. This recession has reduced that income source to practically zero. Nationwide I would guess that there are many billions of dollars in retiree funds in banks that used to be relied upon for income. Those retirees either have to adjust to the loss or else move the money into the market where many of them psychologically can’t cope with the risk factor. I do feel sorry for them but I also understand that the market is not for all.
myown makes the point that here in Northern NY we are used to having a lousy economy all the time so when a short term boom comes along we don’t get too carried away with it. We rebuilt our economies between the 70’s and 90’s. During that time many of the blue collar jobs left the NorthCountry for China, or North Carolina. Iron mines, steel plants, paper mills, and others shut down and took with them many of the smaller businesses that supplied parts, materials, etc.
Many of us are doing “fine” but I think we forget what it is like if you’re young trying to get into a hard job market. People who have established careers generally weather a downturn without too much pain. They have a cushion of savings. They have cars better cars that are less likely to need expensive repairs. They already own a home so they don’t have to try to save money for a downpayment while at the same time trying to get their transmission fixed, pay the rent on their apartment, buy the kids new clothes for school, pay the vet bill for the pet dog that tried to eat a porcupine, pay for braces for Lisa and glasses for Bart, figure out how to get both parents to work on time with only one car, and all the while worry that the boss is saying business is slow and not only wont you get any overtime but you may have your hours cut and you will definitely have to pay more for health insurance. And I forgot the student loan bills.
knuck, covers it pretty well. Those of us with time to comment here are probably not struggling too badly.
Here is some real impact, but those of us (really the middle class certainly not the 1 percent) that took a huge hit have taken it in stride. That hurts everybody:
http://www.washingtonpost.com/business/economy/fed-americans-wealth-dropped-40-percent/2012/06/11/gJQAlIsCVV_story.html
My agency has cut back and laid off employees in the past year. I personally took a 20% pay cut so we would not have to have more actual personnel cuts.
In general this is due to lower donations and cut backs in all levels of government spending, and that we have spoken of before on this board.
In my job I see most in the Tri Lakes area are not much worse off now than 4 yrs ago. This is based anecdotally on new car sales. I am not in the automotive business but I am privy to the paperwork for registering new cars. It doesn’t appear to me that people in this area have decided to keep their old vehicles any longer than they ever have. This could possibly be due to the large number of people employed in the public sector which has not seen a huge drop in employees(save a few schools).
It’s not fine, IMO. My company ( I work remotely and not at the headquarters) relocated offices last year. About half the employees stayed, and many of them have not found full-time work. The company moved the office to take advantage of taxpayer subsidies that another state gave it. Tax dollars at work.
I was just reading the Washington Post while eating lunch. It looks like the president may actually have it backwards. The data seem to indicate that the public sector is the one that is doing “fine”. According to the bureau of labor statistics the lowest unemployment figure for May 2012 is for “government workers” 4.2%.
http://www.bls.gov/news.release/empsit.t14.htm
I don’t know I mean for us as a family we are making less than last year, but it has not caused us to change much.
But at work I see many many people who have nothing, I mean really really poor and can’t find any work anywhere. It is a divided situation.
But come on we have between 10-11% unemployment and a very low median income. Kids are the poorest people in the North Country. Which is the inverse of 30 years ago.
I’ve seen market reports regarding forest products and China that indicated a pull back in the first quarter of 2012. Yesterday a Pennsylvania fellow in the same industry who sells rough dry lumber to cabinet makers and homeowner projects said he saw a rise early in the year and in the past month it has been flat- the difference between multiple customers a day and one which is back where it was last fall. Another facility was gated shut when I stopped. A business I visit in the Lake George region has been working 5 days steady which is better than last year. Most sawmills I see are working steadily at 40 hrs. A couple briefly were above that. The substantial rain has impaired some production.
One business told me that where they had sent full packs of material they started sending half packs as the customers didn’t want so much inventory and now the half pack is the new fullpack. I have been hearing that through the last 18 months, wholesalers or retails don’t want to carry inventory. The same company is working harder to avoid empty backhauls.
I’ve sensed the news over the European financial condition has helped to curb the improvement in economic comfort.
I am in the market for a used car and see what I sense is a lot more advertising for lending to folks with poor credit- I thought that was interesting. One dealership ad found it important to state that they were not a “Buy here, pay here” business which I understood to be that they wanted to make their money on the financing. I even heard some promotional advertising for a major brand yesterday that mentioned price incentives. I have also observed and investigated the price spike over the past two years in the price of used vehicles. Lack of vehicles due to production reductions and the cash for clunkers program but reduction in production against enough demand support higher prices. A vehicle I bought 18 months ago is worth more, with the additional 25,000 miles than it was at purchase time.
The fuel price spike was not helpful to this region as everything incoming and outgoing is carried by truck and the forest industry runs on diesel.
The industry I am in is entering a tightening of risk standards, hesitance to take on risky business and thus insurance premiums will increase. In part it comes with less income from investments. On the other side that is an increase in the expenses for a business to function and so it either has to generate income to compensate or cut costs.
When Jamie Dimon infers that he is willing to become a risk intolerant investor over flack that they earned 30 times what they lost, I can only say, yea, he can afford to say that. In this world that requires we “invest” which means. given the savings account interest rates, we must put money at risk of loss with hopes to cover financing our retirement. Some people work only for the medical benefits, will some work for the retirement benefits at reduced income? Then what next?