Jobless Recovery?
Apparently, all economic indicators point upward and the "great recession" may be abating. Unfortunately, it doesn't look like the unemployment rate is going to go down anytime soon. An article in today's USA Today eloquently describes this predicament.
The article (click here) notes that:
Even with an economic revival, many U.S. jobs lost during the recession may be gone forever and a weak employment market could linger for years.
That could add up to a "new normal" of higher joblessness and lower standards of living for many Americans, some economists are suggesting.
The words "it's different this time" are always suspect. But economists and policymakers say the job-creating dynamics of previous recoveries can't be counted on now.
Here's why:
• The auto and construction industries helped lead the nation out of past recessions. But the carnage among Detroit's automakers and the surplus of new and foreclosed homes and empty commercial properties make it unlikely these two industries will be engines of growth anytime soon.
• The job market is caught in a vicious circle: Without more jobs, U.S. consumers will have a hard time increasing their spending; but without that spending, businesses might see little reason to start hiring.
• Many small and midsize businesses are still struggling to obtain bank loans, impeding their expansion plans and constraining overall economic growth.
• Higher-income households are spending less because of big losses on their homes, retirement plans and other investments. Lower-income households are cutting back because they can't borrow like they once did.
In any case, this "new" normal could have a devastating impact on our city budget. Fewer jobs means fewer retail sales. Fewer jobs means fewer new homes and lower priced homes. These factors translate into less funds to operate our city services at a time when our services are in higher demand than ever.
I'm going to assume that even if this isn't the new normal, we are still looking at less funds in the future to run our community. I'll be blogging soon about how we plan to address the budget challenges we'll be facing in the future. Our staff is developing a new model that will address the need to focus our services where they are needed the most.
The article (click here) notes that:
Even with an economic revival, many U.S. jobs lost during the recession may be gone forever and a weak employment market could linger for years.
That could add up to a "new normal" of higher joblessness and lower standards of living for many Americans, some economists are suggesting.
The words "it's different this time" are always suspect. But economists and policymakers say the job-creating dynamics of previous recoveries can't be counted on now.
Here's why:
• The auto and construction industries helped lead the nation out of past recessions. But the carnage among Detroit's automakers and the surplus of new and foreclosed homes and empty commercial properties make it unlikely these two industries will be engines of growth anytime soon.
• The job market is caught in a vicious circle: Without more jobs, U.S. consumers will have a hard time increasing their spending; but without that spending, businesses might see little reason to start hiring.
• Many small and midsize businesses are still struggling to obtain bank loans, impeding their expansion plans and constraining overall economic growth.
• Higher-income households are spending less because of big losses on their homes, retirement plans and other investments. Lower-income households are cutting back because they can't borrow like they once did.
In any case, this "new" normal could have a devastating impact on our city budget. Fewer jobs means fewer retail sales. Fewer jobs means fewer new homes and lower priced homes. These factors translate into less funds to operate our city services at a time when our services are in higher demand than ever.
I'm going to assume that even if this isn't the new normal, we are still looking at less funds in the future to run our community. I'll be blogging soon about how we plan to address the budget challenges we'll be facing in the future. Our staff is developing a new model that will address the need to focus our services where they are needed the most.
posted by City Manager @ 9:15 PM
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