Are we really out of the Recession?
In the later half of 2010, the NBER (National Bureau of Economic Research) announced the recession was over in June of 2009 because the economy’s business activity had stopped declining. The recession may have ended in numbers and on paper, but the pain hasn’t. In the town I live in, Schoen’s clothing store, which had been in business for over 70 years, just closed their doors. My husband has shopped at a men’s clothing store for over twenty years. That store, Raymond Levine, also just closed their doors after 20 plus years in business. Then there are the well-known companies who have recently filed for bankruptcy, Borders and Giordano’s Pizza. So what is really going on?
Let’s look at the impact of these closings. I don’t know the number of individuals employed at Schoen’s or at Raymond Levine, but I do know those individuals are now unemployed and must find new jobs. For them, the pain of the recession has not ended.
When Borders announced last month that they were filing for bankruptcy, the retail chain stated they will be closing 200 stores and laying off 6,000 employees. The employees who worked at Borders certainly would not agree that the recession is over. And Giordano’s Pizza just announced that it has filed for bankruptcy protection as well. The Apostolou family, the owners of Giordano’s Pizza, also own a real estate company that reportedly has not been able to sell or lease properties the past few years, causing the company to default on their loans. It is evident that although the recession is technically over, the aftershocks are not. Here are some indisputable facts about where we are today:
- Companies, big and small, are still closing their doors.
- Unemployment is at 8.9% as of Friday, March 4, 2011. This number is almost as high as it was at the ‘end’ of the recession.
- 1 in 8 Americans, or 40 million, are enrolled to receive food stamps – the highest on record.
- Gasoline prices have hit a 28 month high which translates to higher prices in the future for everything; from filling our tanks with gas to putting food on the table and clothes on our backs.
- The housing market has not recovered as some cities continue to experience declines in the average home values.
This is most likely not the news you want to hear, especially when we are told we are in economic recovery. So are things getting better? In some ways they are…
- Banks are lending to small businesses again.
- Consumer spending continues to rise. Many families are going on vacation during spring break this year and restaurants have reported an increase in business.
- The GDP (Gross Domestic Product) is rising, meaning supply is moving in the right direction.
- Unemployment dropped by one-tenth of a percentage point.
It is hard for us to feel that we have weathered the storm when those that are still unemployed, or recently unemployed (such as employees of the companies mentioned above) continue to feel the recession.
The difficultly is the speed at which recovery is taking place ... slowly. We take three steps forward and two steps back. It might help if we focus on the positive rather than the negative. Yes, there are still some businesses closing their doors, and unemployment is not where we want it to be, but as Giordano’s attorney said, “The pizza business is still healthy and good.” Think of it as turning a huge cruise ship around; we may not feel the turn taking place, but we are turning.