Is the economic recovery normal?
By some measures the economy is improving, but by others it is still struggling. Are we seeing a normal sequence of events after the terrible recession we’ve been through? N.C. State University economist Mike Walden responds.
“In a typical recession we have a major pullback in what we call durable goods sectors. This would be sectors like manufacturing and construction. The reason for that is that those are sectors where the products can be postponed in their purchase. That is to say, if you need a new TV or you need some new furniture, it is a recession and you say, ‘Hey, I’m going to use what I’ve got until times get better.’ Or if you are looking to buy a house, again you say, ‘I’ll wait until times get better.’
“Less impacted are services like health care and food.
“Now we are … in a recovery mode from the recession, and we are seeing a comeback in manufacturing. In fact, manufacturing has been back to pre-recessionary levels in terms of output. We are not there yet in terms of manpower and labor.
“However, the one exception to this rule is construction. Construction took a big, big hit — in fact, the biggest hit ever — during this recession. And we’ve not yet seen a comeback either in terms of number of homes built or people working. If we had the construction sector back to normal in terms of previous recoveries, we would have an unemployment rate that would probably be in the 7 percent range.”Category: Economic Perspective