It’s been a slow climb out of recession, but Oregon economic researchers are predicting that this year may be different.
Though the National Bureau of Economic Research declared that the longest recession since World War II ended in June 2009, the reality — national unemployment rate still hovering at 9.8 percent last month and home values showing only minimal gains during the past two years — hasn’t been reassuring.
According to the recently released University of Oregon Index of Economic Indicators for last December, this year may signify a gradual recovery period for the nation, if both national and state governments take proper steps.
Tim Duy, a University adjunct professor of economics and the director of the Oregon Economic Forum, authored the University’s Index and said an increase in consumer spending and several other factors are pointing in the right direction.
“The story that the indicators seem to be telling at this point is that growth is likely to be a little bit stronger and a little bit more steady than what we saw in 2010,” Duy said. “The decline in initial employment claims, which was initially very steep, suggests that labor demand has been improving dramatically and the manufacturing industry appearing to be climbing, which is a huge plus for Oregon.”
Duy noted that a majority of the employment gains were largely due to an increase of temporary-help workers and that high unemployment rates and higher gas prices contributed to a strain in consumer confidence in comparison to previous months.
He said nationwide gains have reversed last summer’s economic losses and assuaged concerns that the nation would sink back into another recession.
“National-level indicators improved at the end of 2010, with the economy re-accelerating after suffering a mid-year slowdown,” Duy said in the UO Index analysis. “Improving national conditions, combined with rising state-level measures of activity, point toward a more even, sustainable pattern of economic growth in Oregon in 2011.”
Despite these gains, Mark Thoma, a University economics professor who also writes one of the Wall Street Journal’s top 25 economics blogs in the nation, said the effects of an improving economy will not be immediately felt during its initial climb out of a recession.
“The recession is technically over, but that doesn’t mean the conditions are good for people,” Thoma said. “I think about it like the Central Valley in California, where on one side of the mountain you hit the bottom of the valley, and that’s the trough. We’re just pass the bottom of the valley and the real question is how steep that climb back up the mountain is going to be.”
One of the biggest losses was the high rate of jobs lost during the recession. According to Jeremy Piger, a University associate professor of economics, the U.S. experienced a 6 percent decline in jobs, while Oregon alone saw its decline bottom at 8.5 percent, the greatest decline felt since the Great Depression.
During this particular recession, Thoma said businesses took a big hit to their balance sheets, but personal households that experienced significant losses to their home equity, stock values and retirement savings were most significantly affected.
Because people have so many financial areas to repair, Thoma said this particular type of recession typically has a long, slow recovery period.
Thoma said sufficient local and state government reserves and federal legislation to help local and state governments, as well as households, could have prevented the recession’s impacts.
“We did a good job of fixing bank balance sheets, and business sheets are fine now,” Thoma said. “But we didn’t do a good job of helping households, and that is what’s going to slow the recovery.”
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