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

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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.
 

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  1. By the way, the right to work law is intended to prevent forced union membership, not as a way to keep workers in bondage as you make it sound, Italiano. If union leadership would spend all of their funding on the workers, who they are supposed to be representing, instead of trying to buy political favor and living lavish lifestyles as a result of the forced membership, this law would never had been necessary.

  2. Unions once served a noble purpose before greed and apathy took over. Now most unions are just as bad or even worse than the ills they sought to correct. I don't believe I have seen a positive comment posted by you. If you don't like the way things are done here, why do you live here? It would seem a more liberal environment like New York or California would suit you better?

  3. just to clear it up... Straight No Chaser is an a capella group that formed at IU. They've toured nationally typically doing a capella arangements of everything from Old Songbook Standards to current hits on the radio.

  4. This surprises you? Mayor Marine pulled the same crap whenhe levered the assets of the water co up by half a billion $$$ then he created his GRAFTER PROGRAM called REBUILDINDY. That program did not do anything for the Ratepayors Water Infrastructure Assets except encumber them and FORCE invitable higher water and sewer rates on Ratepayors to cover debt coverage on the dough he stole FROM THE PUBLIC TRUST. The guy is morally bankrupt to the average taxpayer and Ratepayor.

  5. There is no developer on the planet that isn't aware of what their subcontractors are doing (or not doing). They hire construction superintendents. They have architects and engineers on site to observe construction progress. If your subcontractor wasn't doing their job, you fire them and find someone who will. If people wonder why more condos aren't being built, developers like Kosene & Kosene are the reason. I am glad the residents were on the winning end after a long battle.

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