Yes, the economy is better
- June 28, 2014
“Do you think things are getting better?” By now I’ve been asked this so often that it’s like a cruel joke, along the lines of “The whippings will continue until morale improves!” What do you think? Have things gotten better? Of course they have.
Economists tell us the recession officially ended in the summer of 2009. That was five years ago. Looking at previous recessions due to oil and energy prices in the early 1980s and 1990s, as well as the dot-com bust in the early 2000s, these business cycles typically last about 10 years.
Since we’re five years out from the end of the Great Recession, things are probably about as good as they are going to get. And that’s pretty good! Just last year Wall Street reached record highs. The S&P 500 finished 2013 with a gain of 29.6 percent on the year, its largest gain since 1997. The DJIA finished up 26.5 percent, its best gain since 1996. The Nasdaq finished 2013 at its highest level in 13 years with a gain of 38.3 percent. If you don’t think that’s good, just what were you expecting?
Now, it’s true that some of those stock gains fell back and then rebounded this year, and what’s happening on Wall Street doesn’t necessarily reflect Main Street. But beyond stock prices, corporate profits are also up. Earlier this year Bloomberg reported that 74 percent of S&P 500 companies beat their first quarter profit estimates.
Turning to employment, April’s statistics for Virginia, the latest available, show an unemployment rate of just 4.9 percent, the lowest since November 2008.
Though their ability to quickly affect these numbers is dubious, politicians do like to take credit for them. In overall numbers, the commonwealth’s civilian employment now stands at 4.1 million persons, up almost 75,000 jobs since January when Gov. Terry McAuliffe took office. For those keeping score on governors, during the same period at the beginning of the McDonnell administration, Virginia added fewer than 26,000 jobs.
Similarly, the Virginia Economic Development Partnership reports 111 project announcements through mid-June, accounting for 8,005 jobs and $1.23 billion in new investment in Virginia so far this year. During the same period four years ago, there were 139 project announcements, but only 7,362 new jobs and $1.08 billion in investment.
All this talk of improvement is no doubt meaningless to those who are still unemployed or underemployed. Individual hardships are more real than any statistic. In truth, a lot of the jobs lost in the recession were ones made less relevant by technology some time ago, such as administrative support and manufacturing. These jobs will never return to the numbers that once existed. Thinking that they might is kind of like expecting coal, tobacco, furniture and textiles to return as the kings of Virginia’s economy.
The commonwealth is changing and diversifying. There’s less manufacturing but more professional services jobs and a much-expanded high-tech sector. We are still overly dependent on federal spending, but while areas like defense are shrinking, others like electronic medical records are growing.
Four years ago the slogan, “Bob’s for jobs!” had a nice ring to it. Now we’ve got Terry and he’s for jobs, too. Putting campaign slogans aside, it’s fair to say that our economy isn’t totally changed by a few short months in office or even the full four-year term of a Virginia governor. Still the prevailing winds are blowing in the right direction.
It’s good for the state’s chief executive to also be Virginia’s top cheerleader. However, there’s a decidedly less jubilant tone being set by the McAuliffe administration. Four years ago, all we heard was Virginia’s the best state for business. Four years later, we’ve slipped a bit in some of those rankings, but remain among the best. Instead of just trumpeting our successes, the McAuliffe administration is candid about the fact that Virginia has work to do. We need to diversify our economy away from its dependence on the public sector, and to improve the profitability of our ports, and grow workforce development, as well as access to and affordability of quality health care.
Let me say it again, “Yes, things have gotten better.” Those who are still waiting for a better economy are probably mixing their business outlook with their politics. There’s no doubt that just about everyone is frustrated with the slow pace of progress or the lack thereof, by our elected officials. Partisanship remains at an all-time high, but that’s a political problem, not a business one.