IBJOpinion

MARCUS: The recovery is over ... or maybe not

Back to TopCommentsE-mailPrintBookmark and Share
Morton Marcus

“I don’t believe you,” Lina Lassie said as we stood at the grocery checkout.

“It’s true, nonetheless,” I replied, hoisting my six-pack to the conveyor belt. “By several measures, not only is the recession over, but the recovery as well is complete. We are on to the expansionary part of the business cycle.

“At the close of 2010, Indiana’s personal income stood 2.02 percent above its level in the second quarter of ’08, the peak before the recession started. Every state except Nevada has exceeded the level it enjoyed in that quarter. We rank 32nd, behind West Virginia, which is at 7.3 percent above its 2008 second-quarter figure.”

“Do you make an effort to recall percentage points to the second decimal?” she asked.

“No,” I answered truthfully. “Some just stick with me. What fascinated me was that the recession in personal income (that’s wage and salaries, plus the cash value of benefits, self-employment income, unemployment compensation, Social Security, Medicare, Medicaid, plus dividends, interest and rent) … ”

“And what fascinated you was … ?” Lina prodded.

“What fascinated me was that the recession in Indiana and the nation lasted only three quarters. But the Hoosier recovery took six quarters, while the nation as a whole required only five quarters. Also the recession in earnings (what people make from working for themselves or for others) started a quarter before the recession in personal income.”

“You’re joking,” she exclaimed. “You find that fascinating? What kind of a boring life do you lead?”

Polite as ever, I pondered her remark before objecting. “The recession and recovery were not boring. They adversely affected millions of families. If we had read the data from the Bureau of Economic Analysis properly, we might have seen the problems sooner and taken measures to minimize the negative effects.

“In the second quarter of ’07, earnings of Hoosiers working in real estate began to fall. That was a full year before the total personal income for the state began to descend. By the close of 2010, those earnings were still 7.4-percent below their peak.  

“Next, earnings in retail and wholesale trade peaked and started their decline. With fewer goods to move around, transportation earnings started their descent. Because the real estate decline signaled less demand for new and existing homes, a general falloff in construction and manufacturing followed. The retail decline stopped construction of new shopping centers and backed up inventories, which made additional manufacturing unprofitable. And the dominoes fell.

“It took another half-year before dividends, interest and rental income peaked out. Hoosiers fortunate enough to have such assets fared better than those dependent on wages and salaries. After five quarters of decline, wages and salaries rallied in the third quarter of ’09, but at the end of last year were still 2 percent off our all-time peak.

“The worst problems remain in construction (still off 15 percent) and manufacturing (remaining down 6 percent) … ”

“Enough,” Lina snarled as her order was tallied. “I get the point: The data tell the story. But it’s the story and its telling that are interesting, not the dull recitation of the data.”

“If you require a ‘Bourne’ movie to get excited by the data, you, not the data, are at fault. If you cannot see and feel the human element in the numbers, it is your deficiency,” I responded with steely calm as my simple purchase was rung up.

It was, however, too late. Lina had stormed off with her packages and my beer.• 

__________

Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. PJ - Mall operators like Simon, and most developers/ land owners, establish individual legal entities for each property to avoid having a problem location sink the ship, or simply structure the note to exclude anything but the property acting as collateral. Usually both. The big banks that lend are big boys that know the risks and aren't mad at Simon for forking over the deed and walking away.

  2. Do any of the East side residence think that Macy, JC Penny's and the other national tenants would have letft the mall if they were making money?? I have read several post about how Simon neglected the property but it sounds like the Eastsiders stopped shopping at the mall even when it was full with all of the national retailers that you want to come back to the mall. I used to work at the Dick's at Washington Square and I know for a fact it's the worst performing Dick's in the Indianapolis market. You better start shopping there before it closes also.

  3. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  4. If you only knew....

  5. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

ADVERTISEMENT