While doing my daily news scan, I noticed a headline from the State House News Service: “Recession ends in Massachusetts.”
The story reported an announcement by the Massachusetts Office of Labor and Workforce Development saying that revised employment estimates for January show that 3.3 million people were employed in the Bay State that month, which is the first time in nearly five years that total employment in the state has exceeded the previous pre-recessionary peak in April 2008. The state’s unemployment rate was 6.7 percent, which was substantially lower than the national rate of 7.9 percent for the same month. The headline started me thinking about the question of when a recession really ends, where, and for whom?
Economists and policymakers have two different definitions of a recession. The textbook definition of a recession that we all learned in Economics 101 is two consecutive quarters of declining gross domestic product (GDP). The more expansive “official” definition used by the National Bureau of Economic Research (NBER) is that a recession “is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators.”
In 2008-2009, the United States actually had four consecutive quarters of declining GDP and suffered through a stretch where GDP declined in five of six quarters. At the worst of recessionary trough, GDP declined by 8.9 percent in the fourth quarter of 2008. By either definition, that is a “Great Recession.”
However, what I found ironic about a headline declaring that the recession had ended in Massachusetts in January is that according to the NBER, the recession officially ended in June 2009. So, by the first month of this year, the United States was officially in the 43rd month of an expansion phase. Furthermore, state domestic product in Massachusetts has generally exceeded that of the country as a whole during this expansion phase and its unemployment rate has been significantly lower than the national rate.
So if the recession didn’t really end in Massachusetts until two months ago, what is it like elsewhere in the country? This started me thinking about the 1980s when we used to refer to the “Swiss cheese economy” as a way of describing a growing economy with large industrial and geographic pockets of economic decline, unemployment, and social distress.
Pockets Of Pain
Thus, in contrast to Massachusetts, the total number of people employed nationwide in January was still 2.6 million less than during the November 2007 pre-recessionary employment peak. Similarly, while the January Consumer Confidence Index was at 58.6 – significantly better than the all-time low of 23 reported in February 2010 – it was also still significantly lower than the 105 recorded in August 2007 just before the onset of the Great Recession.
Meanwhile, even though the U.S. unemployment rate fell to 7.7 percent in February, it was still 13.8 percent for African-Americans, 9.6 percent for Hispanics, 11.2 percent for those with less than a high school diploma, and 25.1 percent for youth aged 16 to 19. I have no doubt that there is a great deal of overlap among those categories.
Similarly, there are still large geographic pockets of the country where the unemployment rate is nearly two percentage points higher than the national average, including such “high-tech” states as California, 9.8 percent; Rhode Island, 9.9 percent; New York, 8.4 percent; New Jersey, 9.5 percent and North Carolina, 9.5 percent.
When I looked at these numbers, I realized that I did not have to look across the Massachusetts border to find similar pockets of unemployment.
In January, the unemployment rate was 15.1 percent in Lawrence, 14.9 percent in Fall River, 14.2 percent in New Bedford and 11.8 percent in Springfield. And it isn’t just the Gateway Cities, because many of the state’s small semi-rural communities report similar rates of unemployment after the recession: 10.3 percent in Adams and 9.6 percent in Athol, for example. Many of these communities have not seen single-digit unemployment rates for years.
This started me thinking not about whether the recession is really over in Massachusetts, but whether for some people and places there ever was – or ever will be – an economic recovery.
Clyde W. Barrow is chancellor professor of public policy at UMass Dartmouth and director of its center for policy analysis.
