Conservatively Speaking

State Senator Mary Lazich (R-New Berlin) represents parts of four counties: Milwaukee, Waukesha, Racine, and Walworth. Her Senate District 28 includes New Berlin, Franklin, Greendale, Hales Corners, Muskego, Waterford, Big Bend, the town of Vernon and parts of Greenfield, East Troy, and Mukwonago. Senator Lazich has been in the Legislature for more than a decade. She considers herself a tireless crusader for lower taxes, reduced spending and smaller government.

The end of the recession is still bad news

The conventional wisdom among the mainstream media and economists is that the recession is over. Technically, the recession isn’t over until the National Bureau of Economic Research makes the official declaration.

The depth of the current recession that began during December 2007 has reached historic proportions. Now lasting for almost 24 months, the recession is the longest since World War II according to Dennis Winters of the Office of Economic Advisors in the Wisconsin Department of Workforce Development (DWD).

Winters reports the average recession length since 1945 has been 10 months. The previous recession from March 2001 to November 2001 lasted eight months as did the 1990-91 recession.

Even if the experts proclaim the December 2007 recession to be dead and buried, the economy will be grim for some time. Sales of domestic-made cars and sales of homes are still down. Consumer spending is weak. Unemployment nationally is in double digit percentages.  We have finally reached the bottom in declines in exports, inventories, factory orders, and investments. However, the rebound in those areas has yet to begin.

Any economic optimism is derived from the sense that the recession feeling has been stopped, and not from any substantial growth. 

If the recession truly is over, pending the official word out of Washington, when will Wisconsin finally crawl out of its economic abyss?  Our recovery will probably be awhile.

The DWD’s Winters predicts Wisconsin can expect higher unemployment and more jobs lost in the months ahead because employment gains always lag economic gains. Winters reports that following the 2001 recession, Wisconsin’s seasonally adjusted unemployment peaked 17 months later with 30,000 more workers unemployed. Worse yet, Winters says that after the 2001 recession, it took an alarming 50 months for job levels in Wisconsin to reach the previous seasonally adjusted peak.

Before businesses start hiring new workers, they will first increase hours and overtime. Only when they believe demand has increased will they add to the workforce

Moody’s researcher Andrew Gledhill told WUWM Milwaukee Public Radio in an interview during June 2009 that economic recovery among the states will come in three waves. The Northwest will bounce back first thanks to high-tech firms. The second wave will come in the Plains states where the economy, especially the housing market wasn’t impacted as severely. The third wave will be in what reportedly will be a “hodgepodge” of states. Thirty-one states, including Wisconsin will be struggling according to Moody’s until the fall of 2010.

Moody’s Morgan McGowen told WUWM that a serious concern is that as other parts of the country recover much more quickly, Wisconsin will lose people moving to those spots.


Economic forecasting firm Moody’s most recently reported findings that 11 states are now in recovery. Wisconsin is not on the list that includes Alaska, Idaho, Indiana, Iowa, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, South Dakota along with Washington, D.C.

Moody’s based its findings on the states’ employment rates, home prices, residential construction and manufacturing production figures. Wisconsin is one of 38 states that the recession is slowing. Nevada remains mired in a deep recession.

Factors helping the 11 states climb out of the recession include relatively stable housing prices, energy production revenues, low business costs, connecting ports to foreign markets, health care centers, military installations, growing medical  and biotech research industries, and agriculture prices that have remained high.

Many of the states now in recovery also have low state-local tax burdens compared to Wisconsin’s that ranks as the ninth highest in the country according to the tax Foundation in Washington D.C. One could argue that the tax structure in most of the recovering states contributed to their quicker recovery.

Robert Ward, the director of fiscal studies at the Nelson Rockefeller Institute of Government cautions that the end of the recession does not mean an end to state budget woes.  Income and sales tax collections will remain low because people are out of work and spending less. When the recovery does kick in, stimulus money that states depended on will have run out causing more budget headaches.

“The recession is officially over” should be a great headline. However, the good news won’t kick in for months, possibly years later.

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