rss feedFrom the recession’s ashes: How long will it take for Washington to regain lost jobs?
Of all the charts that I kept looking at during Friday’s state of Washington economic symposium, the one I kept studying the most was a multi-color bar chart on Page 27 of the presentation guide.
There it was, on the lower half of the page, before any viewer, with the title, “Months Needed to Recover Job Losses: After Recession Ends.”
Of the biggest bars on the chart was a burgundy one that referred to Snohomish and King counties for the post-2001 recession period. The bar towered between the 45-to-50 month marker.
Translation: It took these two counties about 47 months or so to recover the jobs that were lost during that economic downturn.
I immediately thought: Does this mean that it will take these two counties this long to recover the jobs that have evaporated during this most recession?
It seems like a logical question, one that people in the Seattle area are asking, as well as people throughout the United States for their respective home cities.
The quick answer: It is going to take some time.
While economists that I heard did not give any precise forecast about the number of months for a rebound to occur after this recession, they noted two things: All recessions are unique and job creation lags behind the official end of a recession.
I asked Dave Wallace, acting chief economist for the state Employment Security Department, to shed some light on the question.
The department also runs the Web site, Workforce Explorer, which has statistics.
I flipped out the presentation booklet and pointed to the bar chart on Page 27.
He replied that, as he recalled, if you took out Snohomish County from that graph, the time it took for Seattle and King County to regain those lost jobs for that recession was about 60 months.
Nice, I thought. The time to recovery actually increased.
The reason why Seattle and the rest of King County suffered so much during that downturn was that technology, dotcom and computer companies were at the center of the storm.
He also noted that he’s heard of a tough forecast for the time it might take for economies to bounce back from the lowest point of this recent recession and create jobs that were equal to the peak before the turmoil started.
But, as he added as a caveat, forecasts vary.
His overall explanation:
I think it’s probably fairly safe to assume that it won’t be coming back right away. It’s going to be a slow kind of slog….The nature of this recession is that it’s not centric to us or to King County. It’s just kind of equal opportunity. But it’s bad. It’s much worse. I think it’s going to take a while. It won’t take five years, I don’t think.
And just how many jobs in the Puget Sound region – meaning Snohomish, King and Pierce counties – have been lost during this recession?
Well, according to a chart on Page 28 of the presentation guide from the meeting: An estimated 91,200 jobs.
I counted that number twice.
Those jobs came from manufacturing, construction, trade, transportation, utilities and professional and business services.
Yes, all recessions are unique.
But that is an increase from the 25,700 jobs that were shed for the same categories and counties during the 2001 recession, according to the state Employment Security Department.
Later during a panel discussion, Arun Raha, the chief economist for the state of Washington’s Economic and Revenue Forecast Council, said he believes the recession is over but the official answer from the National Bureau of Economic Research might not be known until next year.
The recovery, he added, could be slow:
We’ll have to crawl up a pretty steep slope.
What could block or slow that crawl up the recovery slope?
He said he is watching the health of regional banks in the state and whether a second round of credit contraction occurs.
These banks entered into commercial loans, sometimes in construction, and might be “vulnerable,” especially since it is difficult to compete with larger financial institutions that are in the same market, Raha explained.
Another risk, he said, is consumer spending – noting that there is a need for job and income growth.
Consumer confidence has been going up and down, according to Raha.
People are not so certain where they’re going to be.
But as East Asia leads the world out of this global recession and the U.S. dollar remains comparatively weaker than the past, it could help boost exports, Raha said.
Keep in mind that a weak dollar makes U.S.-made goods more affordable in other countries but it makes going to other countries, such as European ones, pricey.
But this trend could benefit Washington state, which is the most trade-dependent in the country on a per capita basis, Raha said.
Who knows?
I sure don’t.
That’s why I like attending meetings with economists.
I appreciate Wallace shedding more light on my question, especially since I know that his job as a state economist is not to make forecasts.
Riley Moore, an economist and associate professor at Saint Martin’s University in Lacey, Wash., talked about, in general, foreign direct investment coming to the United States.
That could be another way to climb out of the steep recessionary hole - if the timing is right and a “double dip” recession is avoided.
As Wallace noted in his talk, many countries were already investing in the United States and suffered during this recessionary hit.
I’m almost certain that Wallace and Raha have much more nuanced information to give on this topic. So consider what I included from them to be part of their complete thoughts.
Another question: Is the question of regaining the jobs lost during this current turmoil actually a relevant one?
I’ve heard a few arguments that economies and the number of people in them change all the time.
People move to areas. Others leave. Some companies try and actually prosper during recessions – and one has done pretty well by all standards. Others give it a go and end up closing their doors.
Why fixate on one employment number from a specific date when economies go up and down all the time?
I do think there is some pop psychology to the question of chasing the number of jobs lost.
Economics can be complex. Theories might not always match daily life.
While this number is not the definitive one to measure economic health, it gives people some comfort and confidence.
That in turn, can help boost spending – and hopefully savings – as well as provide the psychological factor to consider more managed risk, investment and research and development.
Or so the thinking goes.
When I think about the economic turmoil that we’re trying to leave, I’m reminded of the title of that old song by the Smiths: How Soon is Now?
I’m also reminded – in a very real way with true costs - that recessions can crush, restructure and realign economies.
So, I wonder: Are we seeing a new global economy unfold before our eyes?
I like that Wallace presented one slide at the meeting with a quote from Walter Bagehot, a 19th Century British journalist and an editor at The Economist:
A panic, is a species of neuralgia, and according to the rules of science you must not starve it. The holders of cash reserve must…advance it most freely for the liabilities of others.
If you didn’t see, The Bill & Melinda Gates Foundation recently announced it was helping people in Washington state with millions of dollars in grants.
The foundation also has given Crosscut, a Seattle-based news Web site, $100,000.
