This upturn depends on where you are
ESSEX JUNCTION, VT.
Call this the spotty economic recovery.
Key indicators like productivity and factory orders are on the rise nationally. Even unemployment dipped slightly last month.
But those numbers haven't yet translated into an economic rebound in many states and metro areas, from Vermont to California, from New York City to Atlanta.
The reason: the battered financial services, telecommunications, and high-tech sectors in those areas are still in a slump.
Companies like IBM, Hewlett-Packard, and WorldCom are still cutting back. With each move, they can send economic shock waves throughout the local communities where their plants are located.
Just ask Bill Russell, who after 21 years as a senior technician at IBM in Essex Junction, Vt., was handed a pink slip last week, as were nearly a thousand of his colleagues. "I don't care what the numbers say," he says. "When you're laid off, you're laid off."
The impact of those job losses is rippling throughout the state. At the Everyday Bookshop in Burlington, Elizabeth Orr is worried about a drop in hardcover sales. Similar stories are being told in parts of California, Texas, and Illinois.
And nationally, the mixed economic news is translating into uncertainty, according to a new Christian Science Monitor/TIPP poll. The poll's "index of economic optimism" stands at 59.7, down from 60.6 in May and a high for the year of 62.9 in March.
While any number above 50 reflects a positive outlook, the recent dip suggests consumer caution amid a fragile recovery from recession.
"There's real fear that a double-dip recession is possible, or a period where the economy just languishes and has no real spark to turn around," says John Challenger, the CEO of Challenger, Gray & Christmas, an international outplacement firm based in Chicago. "The consumer has carried this economy on his or her back during the last year and a half."
While the Midwest is usually the place where a rebound lags, this time it's many of the nation's recent economic powerhouses including not just Chicago but Silicon Valley, New York, and Atlanta that are struggling.
Even the Sun Belt that optimistic Southern swath that in recent years has been a magnet for manufacturing jobs from the North and the Midwest is in the doldrums. In the Monitor/TIPP poll, it registered the greatest drop in confidence.
"It's generally the most robust region," says Raghavan Mayur, president of TIPP, which conducts the poll and is a unit of TechnoMetrica Market Intelligence in Oredell, N.J. "But for some reason they're shedding some of their confidence."
Take Georgia, for instance. The state has lost 125,000 jobs since last April, 80,000 in the Atlanta metro region. That represents about 3.1 percent of its workforce, says Rajeev Dhawan, director of Economic Forecasting Center at Georgia State University in Atlanta. It's also about the same number jobs the area grew accustomed to generating each year during the booming '90s.
The high-tech bust, coupled with a dramatic falloff in tourism after Sept. 11, explain why the area was hit so severely, he says.
The economic outlook for the South, and much of the rest of the country, is also clouded by the fallout from the Enron and Arthur Andersen scandals.
It's producing "gloom in the boardroom," Mr. Dhawan says, which is keeping capital expenditures and hiring down. "They're not in the mood to start any new product lines or expand ... investments."
Corporate scandals, and the fallout from the terrorist attacks, have taken a particular toll in the Northeast the nation's banking and financial center. The million-dollar bonuses are gone from Wall Street. So are the huge profits from the merger-mania of the 1990s. New York State's unemployment rate is 6.1 percent, one of the top 10 in the country.
In California's Silicon Valley, the city of San Jose is facing similar job losses. And as in New York and other cities, the slow economy is affecting tax revenues. The city is cutting its general-fund budget by 10 percent. City Manager Del Borgsdorf recently warned in his budget message that the tough times may be around for awhile. He expects the region's recovery to lag at least six months behind that of the nation.
That's expected in Vermont as well.
As a result, pink-slip-recipient Mr. Russell is not thinking about spending anything right now. Instead, he's focused on saving to help ensure he can pay for his son's senior year in college as well as tuition for himself. He's already decided to go back to school in the medical field. That's one area, along with the housing market, that has flourished here in the Green Mountains and across the US.
But consumers, who continued to spend during the downturn, may not be able to jump-start the whole economy now.
For Vermont, that's even more bad news. This is a state that is "manufacturing- and capital-goods intensive," says Jeffrey Carr of Economic and Policy Resources in Williston, Vt. That means it sells things to companies that sell things to consumers for instance the microchips that go into cellphones and the ovens that make pizzas. Because this was a business-led downturn, Vermont was hit early. And because businesses are now watching consumers warily and keeping a tight hold on their own purse strings, it's expected take even longer to turn around.
Not everyone believes that is bad news.
As she sits behind her Tropical Sno shaved-ice stand on a cobbled Burlington Street, Deborah Smith hopes the bad economic news and layoffs at IBM will cause housing prices, which have risen astronomically over the last few years, to drop. "I'm hoping to get a good deal," she says.