Evansville forecast 2011.

• Author: Khayum, Mohammed

While the Business Cycle Dating Committee of the National Bureau of Economic Research has determined that the 2007-2009 recession began in December 2007 and ended in June 2009, (1) there is considerable variation across metro areas with regard to the timing, strength and persistence of the recovery. While previous post-World War II recessions ranged in length from six months to 16 months for the national economy (averaging about 10.5 months), the 2007-2009 recession was the longest recession in the postwar period at 18 months. In addition, it was the deepest recession in the postwar period: at their lowest points, employment fell by 6.1 percent and output fell by 4.1 percent. (2) In comparison, employment fell by just over 5 percent and output fell by nearly 4 percent in the Evansville metro area.

In the aftermath of the 2007-2009 recession, the recovery of the Evansville metro economy appears to be as slow, fragile and filled with uncertainty as the national recovery. Following decreases in output and employment in 2009, real output, income and retail sales increased in 2010. However, the strength of these increases was far from spectacular.

The dynamics of the Evansville area labor market underscore this with a rise in the unemployment rate from 7.6 percent in September 2009 to 8.4 percent in September 2010 compared with a drop in the national unemployment rate from 9.5 percent to 9.2 percent over the same time period. In previous business cycles, aggregate hours and employment have frequently reached their troughs later than when the recession has officially ended. (3) The rise in the unemployment rate in the Evansville metro area during 2010 suggests that household employment will also reach its trough later than the official date indicating the end of the recession.

An examination of the output and employment performance of the national economy since June 2009 indicates that the current recovery has been the slowest in output growth in the first five months compared to the other postwar recoveries and the slowest in terms of employment growth in the first eight months compared to previous postwar recessions. The Evansville metro area has coped with the recession slightly better than many metro areas in terms of relatively lower output loss and a relatively lower unemployment rate during 2008 and 2009. At the same time, it will take a number of years to recover the jobs lost during the recession. It is projected that the Evansville...