There’s lot of educated guessing in economics and not a lot of time spent looking back to see if those guesses were right.
I’m reminded of that after looking at the latest Creighton University Economic Outlook for Minnesota.
The September report notes recent declines in the Minnesota index but is generally positive. Creighton economist Ernie Goss says:
“During the official national recession, Minnesota lost almost 130,000 jobs. Since the recession officially ended in June 2009, the state has recovered almost 20,000 of the lost jobs. In terms of jobs, I expect the state to return to pre-recession levels of employment by the end of 2011.”
That’s pretty encouraging. Except, in May he predicted it would take until September 2013 to restore job numbers.
Minnesota’s economy has begun adding jobs. Since the beginning of the recession, Minnesota has lost more than 125,000 jobs. Based on the latest state job data and Minnesota’s recovery from the 2001 recession, I not expect (sic) the state to fully restore these jobs until September 2013.
I remembered the 2013 prediction because I posted on it.
There’s been marginal improvement in the overall state economy since May but the employment picture hasn’t really improved at all.
We won’t learn September’s data until numbers are released Oct 21 but it’s mind-boggling to think we’ll see an upswing sufficient to recoup by the end of 2011 all the jobs lost.
I emailed Goss about the big swing in his prediction on how fast Minnesota will restore jobs lost and got this response:
The turnaround is just a bit stronger than I anticipated. Minnesota has been adding jobs at a somewhat higher pace than I initially expected.
However if Congress and the Administration fail to head off the massive tax increase slated to go into effect on January 1, 2011, I will adjust my outlook downward.
I still don’t get it. He’s no fan of the administration’s plan to repeal the Bush tax cuts for the most wealthy Americans. But will that really make the difference in whether 100,000 lost Minnesota jobs are restored in 2011 or 2013?
I’ve emailed Goss again to get some clarity on his analysis.
Meanwhile, I’ll take my cue from Dave Senf, labor market analyst for the Minnesota Department of Employment and Economic Development.
In a recent piece – “The Great Recession lives up to its name” – Senf looks back at the early 1980s recession and writes:
The unemployment rate after that recession remained above its pre-recession level until the middle of 1986, five years after the recession started and 3½ years after peaking.
Even if economic growth exceeds expectations, Minnesota’s unemployment rate may take longer to improve than in the past. Today’s job market, while gradually improving, is in worse shape than 30 years ago, even though both recessions had a 6.8 percent unemployment rate one year after peaking