Oct 27, 2009 9:12 pm US/Mountain
Putting A Period On The Recession
Good Question: How will we know when the recession is over?
Written by Alan Gionet
DENVER (CBS4/AP) ―
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CBS4's Alan Gionet talks with Bruce Kelley, president of the Colorado Container Corporation.
CBS
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Good Question, a regular part of CBS4 News at 10 p.m., is an opportunity for Alan Gionet to drill past the basic facts of a story and give it some depth & perspective. See more Good Question reports.
It's about to become official. The recession is over, but not the pain. The government will release figures this week expected to show that the economy has awakened from its deepest slump since the 1930s and is in the early stages of a recovery. But the following week, the government will issue another set of figures expected to show unemployment continuing to rise toward and possibly above a clearly recessionary 10 percent. There are 15 million Americans still without jobs.
In Colorado, where the recession has been bad but not as bad as some areas of the country, there are hints that maybe things are getting better. There's still home building around Denver.
"I think it's getting better," said construction framing foreman Rob Stratton.
In stores like Northstar Lighting and Design in Centennial, manager Cindy Eller says, "There are days that you think that it's over and there are days you just go, 'It's not over yet.'"
Eller has noticed people making small improvements to their homes, but the business from the construction of high-priced new homes isn't there -- they're not getting built.
"Not the million dollar homes anymore," Stratton said.
Metrostudy's John Covert notes there's still building of lower-priced homes. He tracks housing data for the construction industry.
"We now know that we overbuilt the number of new homes in the marketplace 4 or 5 years ago and we're still recovering from that overbuilding cycle," Covert said.
This year Covert expects to find there were 3,000 homes built in the metro area, but ultimately, that's not enough. He figures a growing area like Denver needs 12,000 or so new homes.
"So prices have come down; there's less inventory in the marketplace, which will allow builders to build more homes when the overall economy starts to allow that to happen," Covert said.
In earlier recessions and depressions it was the manufacturing economy that told the story of when we were out. While America is no longer the manufacturing economy it once was, it still makes stuff -- stuff that has to go places to be sold. To do that, it's probably in a box at some point. CBS4 asked Bruce Kelley, president of the Colorado Container Corporation, when can we call the recession over?
"You'll know it when you see it," Kelley replied. "But you can't really define it. But we'll know."
Kelley does know he's cut his staff by about 10 people over the past year. That's less than 10 percent of Colorado Container's workforce. He's cut hours for remaining workers.
Companies that make and ship things were living off inventories for a while. That was the low point. Many companies have been poised to order boxes but haven't.
"There's a long line in the development of your packaging. You have to do design, you have to do testing, you have to play around with your graphics. And that's the kind of stuff really that has never dropped off for us," Kelley said.
But follow-through with big orders has been slow. In September and October companies gear up for the holidays.
"Right now we're at the traditionally busiest time of the year and we have worked 40 hours a week here recently, but not very much."
It will take having his people back at 40 hours a week, according Kelley.
Still, national economists are thinking things are ending. A survey of economic forecasters prepared by Blue Chip Economic Indicators, a research organization, predicted GDP growth to remain positive in each quarter through the end of 2010. In a survey by the National Association of Business Economics, 34 of 43 economists polled said the recession is over.
"From a technical perspective, the recession is very likely over," said Federal Reserve Chairman Ben Bernanke.
But technical and gut are often two different things. In the guts, it's a "It ain't over 'til it's over" scenario. For that, we'll all have to agree.
As Ronald Reagan said, "A recession is when your neighbor loses his or her job. Depression is when you lose yours."
The Associated Press contributed to this report.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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