“The economy is terrible and it’s getting worse,” Simon Schlep insists as he buries a pierogi in ketchup.
“No!” I shout, too late. “No one puts ketchup on a pierogi; not here in Whiting, not anywhere that civilization thrives.”
Simon looks around and then asserts, “Who says? There aren’t any rules for this festival. I like ketchup. I eat ketchup.”
It’s too hot, too muggy for me to object. The crowds are immense for this narrow street jammed with food and curiosity stands. The polka music is delighting toe-tapping elderly people who have turned off their hearing aids.
“Let’s sit over here,” I say, pointing to one of the few open benches. After I devour my stuffed cabbage, but before I attack the sauerkraut and sausage, I ask, “What’s this about the economy?”
“It’s horrible. Too many people unemployed for too long. No jobs. Nothing happening,” Simon says.
“You’re right, but you’re wrong,” I say. “The economy is growing again; slowly, yes, but growing. Indiana’s unemployment rate is down from 10.8 percent a year ago to 10.1 percent; the number of people unemployed in the state is down 8.6 percent.
“The simple fact is that we are having a recession on top of the continuing restructuring of the economy that has been going on since the 1980s. In the past 10 years, we’ve added the equivalent of 10 million full-time jobs while losing 4 million in manufacturing.”
Simon keeps eating; I can’t look at what he has done, adding inappropriate condiments to his plate.
“The financial boom/bust has devastated one of Indiana’s signature industries,” I add.
“Hmm?” Simon says.
“Manufactured housing,” I reply, savoring a cheese pierogi. “Everyone points to the auto and RV industries, but manufactured housing has been particularly hard-hit over a long period. When the financial markets decided to support almost any kind of housing mortgage, they didn’t include manufactured housing. It was the conventional site-built home that got all the money. Manufactured housing units produced in the United States fell from 373,000 in 1998 to 147,000 in 2005. Then, once the conventional housing market failed, manufactured housing fell to fewer than 50,000 units last year.
“Indiana’s production in 2009,” I continue, “was down to 8 percent of what it was in ’98, when we accounted for 10 percent of all U.S. production. Recently, we’ve been only 6 percent of a severely shrunken U.S. output.”
“But it will all bounce back according to your rosy view of the economy,” Simon snarls.
“Maybe and maybe not,” I say with certainty. “There are so many homes on the market at very favorable prices that manufactured housing is not as competitive as previously. Plus, lenders are still reluctant to put money into the market for any loan that doesn’t appear to be a sure thing. Yet … ”
“Ah, here comes the famous other hand,” Simon says.
“Precisely,” I say. “Hard times may push more people toward manufactured housing, but it’s a difficult call. There’s been a major decrease in plants producing manufactured housing, but that does not mean only the least efficient have been eliminated from the market.”
“And it all means what?” Simon asks.
“Continued confusion,” I say. “Parts of the economy will pull out ahead, leaving others in the dust. Consumers are ready to spend; just look at this eager crowd. But a recovery does not put you back where you were. Just as not all firms or industries are restored to some former glory, not all pierogi are created equal. Let’s go find some more.”•
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 email@example.com.