Jobless see little sign of recession's end

August 01, 1991|By Jon Morgan | Jon Morgan,Evening Sun Staff

Jaqueline Newman has heard all the talk about the end of the nation's recession. She's read about the improved economic data and how the experts think we're on the road to recovery.

But it makes little difference to Newman, who lost her job as an executive assistant. Her hopes of landing another job have almost gone the way of her unemployment insurance checks, which ran out three weeks ago.

"I wouldn't call it a recovery. I don't feel any break. No way," said Newman, who has been reading want ads and filling out job applications from her Baltimore home since January.

To economists, Newman is a flesh-and-blood example of why this has been called the "stealth recovery." What may end up being the slowest economic turnaround since World War II has so far been almost imperceptible to many.

Even in the best of recoveries, businesses postpone hiring until they are sure the economy has revived, something that can take months. But the pain could be prolonged this time by a lack of consumer buying and nagging worries about debt, the depth of the recovery and the fiscal plight of the federal government.

In the meantime, unemployment is still rising in both the state and the nation despite signs that the recession has already ended.

Preliminary data from the federal government indicate that the economy grew by a meager annual rate of 0.4 percent in the second quarter of the year. Unless the figure is revised downward, it signals that the recession technically is over. A recession is defined by a decline in economic growth for two consecutive three-month periods.

The strength of the recovery was further called into question by data released yesterday. The Commerce Department said orders at the nation's manufacturing plants, a key indicator of economic strength, dropped by 1.4 percent in June after rising in May and April.

Separately, the department said the government's main forecasting gauge climbed a weaker-than-expected 0.5 percent in June after gaining 0.8 percent in May. This confirmed the suspicions of some economists that the recovery is going to be miserably slow.

"The recession is over. That's the good news. The bad news iit's going to take a while for things to get better," said Ken Goldstein, an economist for the Conference Board, a New York-based business research organization.

"For people who say it doesn't feel like things are getting better, they are right," Goldstein said.

He doesn't expect the economy to recover to pre-recession levels for another year or longer. Contrast that with the recovery from the recession of 1981-82. The economy roared back to life with such vigor that the decade will be remembered as one of unprecedented peacetime growth.

But much of that growth was aided by government spending, especially on the Reagan defense buildup that boosted big Maryland employers such as Westinghouse Electric Corp., Martin Marietta Corp. and others.

This recovery is not going to enjoy a "fiscal kick" by the federal government in the form of a major jobs bill or big spending projects. Uncle Sam's finances are in shambles and he can't be counted on for help, Goldstein said. That has put stress on state governments, like Maryland's, which have responded with a combination of tax increases and spending cuts -- both of which tend to exacerbate economic problems, he said.

And there is the persistent concern that certain industries, especially banking, retail trade and commercial real estate, may still be staggering.

These factors, as well as mixed economic data, have led some economists to predict the recovery could even slip for a few quarters, creating a so-called "double-dip" recession. Other, more optimistic economists predict moderate to strong growth as factories gear up to replenish historically small inventories.

Anthony Sulvetta, managing director of investment management for FBW Investment Management, a unit of Washington-based Ferris, Baker Watts, thinks we've seen the bottom of the economic trough. He predicts a fairly strong short-term recovery followed by an extended period of sluggish growth.

In the immediate future, Sulvetta thinks factories will be cranking up quickly to rebuild inventories of cars and other products that were at extraordinarily low levels when the recession began.

But he is troubled by several factors that could hamper longer-term performance. The baby boomers are growing up, spending less and saving more. And debt built up by consumers, businesses and governments during the go-go '80s have left us in the no-no '90s.

Workers should not expect a break from high levels of unemployment until sometime this fall, Sulvetta said. In the meantime, companies will try to adjust to increasing demand with overtime and other stop-gap means.

In each of the past eight recessions since World War II, the unemployment rate did not improve for three to four months after the end of the recession, he said.

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