Indicators from unemployment to home sales to commercial building permits paint a picture of an economy that began to bounce back this spring and then retreated again, the News & Observer reports.
Economists say the recovery appears to be slower, shakier and more challenging than many expected. Part of the reason for the dismal reports, some say, is government stimulus programs, which paved the way for big rebounds – and then big pullbacks when they ended.
Triangle homes sales slumped badly in July, for example. There were 1,366 homes sold during July in Durham, Johnston, Orange and Wake counties, down 33 percent from the same month a year earlier, Triangle Multiple Listing Services data show.
Unemployment, perhaps the most visible symbol of continued pain, fell to 7.5 percent in July for the Triangle, below the national rate of 9.5 percent and state rate of 9.8 percent, but still well above the level at the start of the recession. The drop does not necessarily indicate job growth, either, because many people are leaving the search altogether, skewing the numbers.
“It’s hard to find what you would actually call a bright spot, considering the level of darkness we’re in,” said Rick Kaglic, an economist with the Federal Reserve in Charlotte.
“The latest economic indicators don’t come as much of a surprise,” Kaglic said. Early in the year, he warned the recovery would be characterized by a “low-trajectory climb out of the trough with undoubtedly some turbulence along the way.”
Kaglic anticipated the most turbulence from May to September as government programs expired. But now, “we’re probably a little lower in the sky than I thought we would have been in this point in time,” he said.
Still, a double dip is unlikely, mainly because there isn’t much excess left in the U.S. economy, he said. In addition, companies continue to add jobs, even though that growth is not very satisfying.
Unemployment will probably remain elevated for the rest of the year, even as job growth continues, Kaglic said.
“Since the recession ended, likely in June 2009, several factors have hindered the recovery,” notes UNC Charlotte economics professor John Connaughton. The first is that the economy is not growing as rapidly as many had hoped. The second: job creation.
“OK, the economy stopped bleeding, the economy’s turning around, we’re getting a little bit of growth – why no jobs?” he said.
But the lag isn’t unusual. After the 2001 recession, it took almost two years for employment to rebound. Most economists expect the jobs picture to remain bleak through spring 2011, Connaughton said.
The wild card in the latest recession, he said, was the banking crisis, which crippled many small businesses and made lenders more risk averse. The lack of credit has resulted in a “portion of the economy not behaving like it would at this stage in the recovery,” Connaughton said.
Connaughton said he is hoping for significant changes, though, in nine months to a year as banks begin lending more money and companies begin to hire.
“We’re just biding our time, so to speak,” he said. Read More.