The economic recession has technically been over for more than two years, but with a stagnant Congress and only marginal gains in employment at times, the full-speed recovery that some economists would like to see has eluded the U.S.
Recently, however, there has been more reason for reserved optimism economically, both locally and nationally. According to the Department of Workforce Development, Wisconsin added 4,500 private sector jobs in December, and the Standard & Poor’s 500, a market index of stock prices for the top 500 public companies, closed at a five-year high last week.
Michael Browne, a professor of finance at Marquette, said the latest jobs numbers continue a trend of a slowly growing economy.
“Based on these growth rates, the unemployment rate will average 7.6 percent to 7.9 percent in 2013,” Browne said in an email. “Some are calling this recovery a ‘jobless recovery’ because the typical new job creation experienced following a recession is not occurring. Economic conditions are getting better but at a slow rate of improvement.”
Browne said the S&P high signifies gains for companies and a boost in consumer confidence.
“In the Milwaukee area, many companies are experiencing positive financial results,” Browne said. “Companies like Johnson Controls, Rockwell Automation, Harley-Davidson and General Electric Healthcare (are seeing gains). The key driver for the S&P increase is increased corporate profits generating higher stock prices.”
The new December jobs enter into the private sector of the economy, but the public sector continues to lose jobs, with 3,200 lost in the month of December. According to the Department of Workforce Development, Wisconsin added 9,700 private sector jobs in 2012, with November and the preliminary December numbers accounting for 10,800 jobs, bringing Wisconsin out of the negative at years end.
Abdur Chowdhury, a Marquette professor and chair of economics, said public sector numbers are falling because of government cutbacks.
“The public sector is declining because the government is cutting back on employment,” he said. “Growth in private sector employment is good for the economy, as it represents the major employment source.”
Chowdhury added that job creation in Wisconsin is below expectations.
“Governor Scott Walker has said that he will create 250,000 new jobs in 4 years,” Chowdhury said. “We are nowhere close to achieving that goal.”
While the addition of 4,500 Wisconsin jobs and the S&P five-year high are encouraging news, the real challenge is to accelerate the recovery process to a pace that matches the desire of Americans, especially Wisconsinites.
Steven Crane, a Marquette associate professor of economics, said he believes sluggish economic recovery could be partially attributed to some of the uncertainty coming out of Washington, D.C.
“I think some clear sign of progress in Washington is needed for ‘full recovery mode’ to occur,” he said.
Chowdhury said other factors are in play as well.
“The recovery will pick up when the labor market and the housing market start doing well,” Chowdhury said. “We have seen some turnaround in the housing market. The labor market now needs to pick up.”