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Economic Recovery and Election-year Politics
By: Ken Tiratira, Executive Vice President &
Ryan Farias, Strategic Employers Services Associate Employers Group
T
he National Bureau of Economic Research, a panel of academic economists
based in Cambridge, MA, recently declared that the economic recession is over. In actuality, the recession ended back in June 2009. Data indicates that the economy began growing in the third quarter (July-September) 2009. If the economy were to contract or shrink again, the contraction would reflect the start of a new recession, potentially a “double- dip” recession, which last occurred in 1981-1982.
The major differences of the recent recession and previous economic downturns are rooted in length and severity. To compare, the 2007- 2009 recession lasted eighteen months, while previous ones lasted less than a year. Further, during this last recession, the economy shrank by more than four percent and 8 million people lost their jobs
Current performance in the financial markets provides encouraging signs that economic recovery is happening, albeit at a very slow pace. The financial markets, such as the Dow Jones industrial average, Nasdaq, and Standard & Poor’s are all increasing between one and two percent this year. While the numbers aren’t great, as the markets typically reflect an annual
growth rate between seven and 10 percent, the uptick is much better than the declines of the past two years. Other economic indicators show that manufacturing, industrial production and consumer spending have made small gains.
Certainly, the declaration by the Bureau is noteworthy and confirms what numerous economists have communicated for quite some time. And, this year’s activity on the financial markets is a positive indicator. However, for a significant number of businesses and consumers, the insight that the economic recession ended last year seems purely academic, as double-digit unemployment persists and new job creation is extremely sluggish. Overall, it just doesn’t feel like the economy is on the road to recovery.
Across the country, private sector job growth still illustrates wariness and cautiousness with respect to job creation and hiring. Job losses through 2008-2009 still outnumber jobs created, although the positive news is that the rate of job losses overall has actually slowed since a high of 8.5 million jobs lost back in December 2008. Small business accounts for greater than 60 percent of all net losses. A detailed table of private sector job gains and losses by state, can be found here:
10 CA Employer September 2010
ADVOCACY
http://www.bls.gov/news.release/ cewbd.t05.htm
Recent unemployment rates across the country are a mixed bag: twenty-seven states recorded unemployment rate increases, thirteen states registered rate decreases, and 10 states had no change. The national unemployment rate in 2010 stands at 9.6 percent, almost equal to the 2009 rate of 9.7 percent. State by state unemployment rate data is available here:
http://www.bls.gov/ news.release/
laus.nr0.htm
In addition to the financial and regulatory challenges that businesses have encountered over the last two years, the legal front has provided no respite for business. In Seyfarth Shaw’s January 12, 2010 annual report on workplace class action litigation, it was found that:
• ERISA and FLSA collective class actions rose in 2009
• The pursuit of nationwide FLSA collective actions by the plaintiffs’ bar will continue in 2010
• ERISA class actions took center stage in 2009 as case filings surged and settlements in employee benefits cases led all other types of class actions.
• The financial crisis increased the pace of FLSA collective action and ERISA class action filing seeking recovery for unpaid wages and 401 (k) losses.
• The economic crisis spawned more employment-related case filings by both laid-off
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