Michigan recession seems to linger
Brian J. O'Connor/ Detroit News Finance Editor
21 September 2011
The recession is long over, the experts say, but for many people it's still going strong.
One year ago Tuesday, the committee of economists who decide such things announced that the worst economic recession since the Great Depression was over. In fact, the panel said, the recession officially ended more than a year earlier, in June 2009.
But since the end of that epic 18-month economic collapse, over 1 million more Americans are out of work, while total U.S. employment is down by more than 300,000 jobs. Another 1 million-plus citizens have given up looking for work.
In Michigan, the great recession lasted until the end of 2009.
Since then, the total of unemployed workers in the state has declined by 137,000, but the number of people working dropped by another 18,000, and more than 120,000 state residents gave up trying to find any kind of job here.
"It's an unsatisfying anniversary," said Robert Dye, Comerica Bank's chief economist. "We're more than two years into an economic expansion, but the psychology of the recession remains with us."
Michigan's manufacturing economy tends to go into recession faster and earlier than the rest of the country, but comes out faster, too. But that growth has nearly stalled. Last month, 15,000 people in the state joined the unemployed. As consumer spending falters along with the stock market, more workers are likely to join the jobless rolls next month, too.
Recovery signs slow
With the worst of the downturn supposedly over more than two years ago, it looked like Melissa Doyer dodged the rounds of pink slips that papered offices during 2008 and 2009. Instead, the 39-year-old Taylor resident was laid off in June from her job in the Toledo office of the Ohio state tax department.
She's one of the thousands of state and local workers who've lost their jobs as federal stimulus money dries up and local governments have cut jobs.
Saturday found Doyer in the crowd of 2,000 hopefuls lined up at Quicken Loans' headquarters.
"I got there and the line was halfway around the block," Doyer said. "They said they couldn't guarantee anybody could talk to us." She was allowed to leave a resume and told she'd be contacted within two weeks.
"I spend most of my mornings on the computer to see if there's anything I'm qualified for, and I put in my application. I just want to find a job and pay my bills."
Doyer's been able to keep up with hers, thanks to unemployment insurance. But many others still can't make ends meet, even though the U.S. economy has been growing for 26 months.
"Does the recession look over?" asked Diane Reichel, who manages financial counseling for Greenpath, a nonprofit in Farmington Hills. "We're still getting a lot of calls from people who are out of work and have been out of work for a long time."
Greenpath offers pre-bankruptcy counseling, along with foreclosure prevention and debt counseling. Last year, Michigan had more than 50,000 bankruptcy filings and has already racked up more than 30,000 this year.
The rate of foreclosures in the state appears to have improved, but hundreds of thousands of homeowners are still defaulting on their loans. In August 2010, 14 months after the recession technically ended, more than 338,000 homeowners were in some stage of default on their mortgages. Last month, the total was down to just over 220,000 but that's after a number of banks have slowed down their foreclosure rates because of concerns over paperwork legalities.
If there's any real slowdown in foreclosures, it's not showing up at Greenpath.
"Bankruptcy is down a little bit, and we're starting to see a little bit of increase in debt counseling," Reichel said. "But housing counseling has been pretty steady for the last couple of years."
And probably for at least a couple of years more, according to Daren Blomquist, spokesman for foreclosure-tracking firm Realty Trac. If there were no new foreclosures in the country, Blomquist says, it would take 15 months to sell all the homes now for sale by lenders. In Michigan, that supply would last for 21 months. A supply of six months or less would be normal.
"The foreclosures we're seeing now are the result of people getting in trouble or losing their jobs several months ago, if not years ago," Blomquist said. "Even though the recession has ended, there still are a lot of underlying problems in the economy."
Realty Trac estimates it will take close to two years for home prices to start recovering. And new concerns are rising along with the rate of foreclosures, which increased by 33percent last month in the U.S., and 36 percent in Michigan.
"The foreclosure problem," Blomquist said, "may not be over anytime soon."
Jobs problem remains
And given the depth of the recession and the weakness of the recovery, neither will the jobs problem, said Don Grimes of the University of Michigan's Institute for Research on Labor, Employment and the Economy.
"We've had job creation in the state of Michigan, and maybe we're up 50,000 jobs," Grimes said. "For the 50,000 people who are now employed, that's great. But there are 500,000 people who are officially unemployed. That's only one person out of 10 who found a job." While the recession is over for some, "The rest say, 'It didn't do me any good' — and they're exactly right."
In the meantime, job-hunters are focused on ending their own personal recessions.
Raphael Johnson was laid off as a logistics manager at Ford Motor Co. a year ago. Since then, the 28-year-old Southfield man has been selling diet supplements to support his wife and three children. He interviewed Saturday at Quicken, and said he was promised a follow-up.
"Companies put out applications and have interviews, but it's still like there's a hiring freeze on," Johnson said. "It's like they're looking but they're never really hiring."
And the longer the post-recession era goes with no improvement, the harder it gets, especially for the long-term unemployed.
"It's really scary," said Doyer, the laid-off tax manager.
"Some people won't even talk to you because you're overqualified. I haven't heard back from anybody. I just keep putting in applications and figure we'll see what happens."
From The Detroit News: http://detnews.com/article/20110922/BIZ/109220382/Michigan-recession-seems-to-linger#ixzz1YhdSbaWv