Economists say a recession tends to be an emotional thing; something that happens when confidence goes away, and people start hunkering down. On Tuesday, state economist Tom Stinson said Minnesota is already in a recession. Then, Gov. Tim Pawlenty dismissed the views of the guy the state turns to for these sorts of things by saying, "Tom Stinson tends to be a bit on the pessimistic side of things, to put it charitably." Smack!
It's natural for politicians to criticize the experts -- Stinson is widely acclaimed for his ability -- but it doesn't give the average Joe much confidence that name-calling at the start of a recession is going to lead to a reasonable plan to end it.
Let's face it, the steady drum beat of bad news makes it tough to be Mr. Sunshine where the economy is concerned. Macy's just announced it's cutting jobs. Northwest is about not to be a Minnesota-based airline. 3M is pulling the plug on 1,000 St. Paul jobs, and has eliminated 800 Minnesota jobs in a little over a year. The Ford plant is closing. A lot of people blame the media for the bad news, but those are the facts.
Even if Stinson is a pessimist, it's hard to find people who know the economy who aren't.
"There is certainly enough out there to make people worry," said David Wyss, chief economist at Standard & Poor's in New York in this morning's St. Louis Post Dispatch. "We think we are getting very close to a recession."
For Minnesotans, if you work in a factory, you should probably be most worried, followed by construction workers, and those in the information industry -- that's me -- according to the state employment report. Those are the two areas that have lost the most jobs in the last year. If you're in the travel and leisure industry, business wasn't awful in December but Steve Hine, the Labor Market Information Director at the Minnesota Department of Employment and Economic Development, said today that that's one area that could be hurt if people stop spending.
On the other hand, he says, there are "counter-cyclical" occupations that tend to weather downturns better: health care, career counseling, even psychiatric counseling.
But there's another problem: inflation. You'd have to be pretty old -- in working-age years -- to remember what inflation can do. Gerald Ford, was so frustrated by it that the best he could do was try to get everyone to wear a "Whip inflation now" button. It didn't work. During the subsequent Carter administration inflation rose about 10 percent a year.
Are those days back? Not quite. But new government data says it's a bigger problem now than at any time in 17 years. The combination of inflation and recession is rarely pretty.
So now the big question: are you worried? How is the economy making you change the way you live, if at all? Aside from the economic mumbo jumbo, I think recessions are personal things. Even if we keep our jobs, we worry more or less. I'd like to assemble a small group of individuals around the state to talk about this regularly as we go through this period. Are you up for it?
"are you worried? How is the economy making you change the way you live, if at all?"
Not so much worried, per se, as keeping an eye on the situation. We aren't changing our lifestyle, but we're pretty fiscally conservative already. People call me cynical, but I think its going to get worse before it gets better, primarily because I don't see where new buyers are going to come from to soak up the excess inventory in the housing market. Perhaps investors will step in when prices fall far enough; but at this point you can't pay a mortgage solely with rental income - a sure indicator that the market is overpriced.