More evidence arrived yesterday that the recession in Indiana has finally bottomed. But little of that evidence suggests
a quick recovery.
The Federal Reserve Bank said in its regular Beige Book report that economic decline in its Chicago
district, which includes the northern two-thirds of Indiana, leveled off in July and August.
Activity has stabilized at a low level as consumer spending increased
and the decline in business spending slowed.
The results are consistent with
unemployment rates, which have stabilized at about 10.6 percent in Indiana and about 8.7 percent in the
Indianapolis area.
The Fed said the Chicago region benefited from Cash
for Clunkers, but that sales of appliances and other big-ticket items stayed weak.
How do these reports square with your experience?
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For one thing, the Small Business Administration has raised the guaranty percentage of their loans to 90% from 85%, which has spurred some small business lending. Those funds are running low and will likely go away fourth quarter of 2009 (were supposed to last until 2010) unless Congress adds more of our money to the pot. Once that $$ runs out, it is very likely that bank lending will slow again, businesses will tighten their belts further, and so the cycle will repeat.
Also, once the inflationary effects of the Obama Deficit Machine start to appear, I think we'll see a more rapid decline than we just experienced. The few industries that have started to recover will be hit the hardest, followed by even more massive layoffs and compensating wage reductions and price increases.
Not to be pessimistic, but the light at the end of the tunnel is indeed a train. A train going by the name Government Intervention.