Dear readers, I am in Regensburg, Germany, which seems to be a nice place. However, the ship in parked in a satellite dead zone, and I have had to repair to an Internet cafe, which is not my preferred way to work. Fortunately, reader Paul S. provided a useful sighting.
Media mavens may recall that McClatchy was one of the few news outlets in the US in the run-up to the Iraq War to provide at least sometimes skeptical coverage (I was in Australia at the time, and the disparity in reporting, Oz vs. US, was stunning). So it may not be surprising to find that McClatchy is not in lockstep with the green shoots cheerleaders. Specifically, it focuses on the outlook for recovery in employment and finds little cause for optimism. Bottom line: a granular analysis suggests that most communities will not regain their pre-downturn employment levels until 2012.
Be sure to see their cool interactive map. From McClatchy:
While signs indicate that the worst of the recession may be over, only six metropolitan areas across the country are expected to regain their pre-recession employment levels by the end of 2009, according to projections from IHS Global Insight, a leading economic forecaster.
The areas poised for a jobs rebound later this year are: Anchorage, Alaska; Champaign-Urbana, Ill.; Coeur d’Alene, Idaho; Columbia, Mo.; Laredo, Texas; and the Houma-Bayou Cane-Thibodaux areas of Louisiana.
Only five areas are expected to see a similar jobs recovery in 2010: Las Cruces, N.M. and El Paso, San Antonio and the McAllen-Edinburg-Pharr and Austin-Round Rock areas of Texas.
Most of the country — 286 of 325 metro areas covered in the IHS analysis_ aren’t likely to regain their pre-recession employment levels until at least 2012.
Of these areas, 112 probably won’t return to their recent peaks until 2014 or later. These include Rust Belt towns such as Cleveland, Dayton and Akron, Ohio; Detroit, Warren and Flint, Mich.; the hurricane-ravaged Gulfport-Biloxi, Miss., area and the greater Los Angeles region, where the housing bubble and high unemployment have strangled the local economy…..
“This recession is unique because of the way it leveled the playing field,” said James Diffley, IHS managing director of U.S. regional services. “The precipitating factor, after housing, was the finance industry, and that affected everybody. Now everybody’s cutting back on debt, and the banks are being more cautious about lending, so there’s less spending. All those things mitigate against a quick turnaround.”
The IHS analysis covers 325 of 363 U.S. metropolitan areas, or population centers, as defined by the Census Bureau. Thirty-eight metro areas weren’t included because of a lack of government data, said Jeannine Cataldi, an IHS senior economist…
IHS expects Texas, Oklahoma and Alaska to be among the first to match their previous employment peaks because their economies never fell as far as those in the rest of the country..
“Although we expect the economy to bottom out in GDP terms during the second half of the year, job losses should continue throughout 2009, with the unemployment rate peaking just above 10 percent,” said IHS chief U.S. economist Nigel Gault in a recent letter to investors. “We still expect total job losses to exceed 7 million. But the worst news is behind us, and employment declines should progressively soften as the year proceeds.”
In fact, by the end of the year, the economy is expected to begin adding jobs. “We’ll start to have an uptick, but it won’t be very strong,” Diffley said..
Note that this is more optimistic than the typical trajectory for financial crises. The Kenneth Rogoff-Carnen Reinhart analysis of past severe financial crises suggests that unemployment will peak at over 11%, not the 10% assumed above.