By Isaac Bonnell
The news was met with mixed feelings from many in the business community. How could the recession be over if so many people are still out of work? And what about the housing slump and the lack of consumer spending?
Technically speaking, the bureau is correct in its assessment of the economy, said regional labor economist Reinhold Groepler. The economy has improved since June 2009, though only slightly and not in all areas.
“Employment is still lagging, it hasn’t recovered yet. But it’s a different kind of recession that we’ve been in here,” Groepler said. “Credit bubbles take many years to grow out of; it can take six to seven years. They just don’t heal like a normal recession does.”
In its report, the NBER stated that the recession lasted from December 2007 to June 2009, the longest recession since World War II. Although the economy has since turned around, “the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity.”
So what does that mean for the average small business owner? That things are changing, but slowly.
Steve Griffith of Griffith Furniture on Meridian Street said business has improved this year compared to last year. More people are in the store and more people are buying furniture, he said, but sales still aren’t back to pre-recession levels.
“It’s definitely on the road to recovery, but it’s a slow road,” Griffith said. “People are only buying what they need. I think a lot of people are a lot better at living within their means now than three or four years ago.”
As the recession unfolded and personal incomes withered, the market for more expensive goods such as TVs and furniture was hit hard — and has been slow to return. Just this summer, a full year after the official end of the recession, Dream On Futon closed and Barbo Furniture left its downtown retail location.
“I don’t like to see anybody struggle. But it has been hard on all the dealers and manufacturers — everybody has had to adjust,” Griffith said. “A lot of good retailers closed and manufacturers shut down, not because they did anything wrong, just because of the economy.”
One advantage that helped Griffith Furniture weather the recession is that the business owns its building and doesn’t have a monthly mortgage or rent payment to make, Griffith said. The business was started by his grandfather 71 years ago and the building was paid off long ago.
Sales are edging up slightly, and Griffith said he is hopeful that the trend will continue in 2011.
“People are still buying higher-ticket items, but only if they can afford them,” he said. “Everyone is trying to live within their means and I think that will make the economy stronger in the long run. I think the recession kind of taught everybody an old lesson.”
A successful business model
Frank Nelson started a business just as the recession was ending — though that fact was not known at the time. A former garbage man, Nelson opened the local franchise of Pacific Power Batteries at the end of August 2009.
Back then, signs of the lingering recession were apparent as Nelson tried to get his shop open.
“I struggled greatly to get a loan,” he said. “I went to 22 banks. Everybody would take my application, but then turn me down. My franchisor tried to get a loan and even he was turned down.”
Despite difficulty opening the store, Nelson said he wasn’t worried about the recession.
“I did a lot of research and knew this market was ripe,” he said, adding that he also wrote a very comprehensive business model that he felt was realistic and achievable. “Now my business plan is ahead of what I thought it would be.”
In his first year of business, Nelson saw his sales increase every month except for February. He has added more than $15,000 in inventory and is planning to hire a third employee after the holiday season.
While Nelson has certainly seen the upside of the post-recession economy, he said he still sees signs of lingering unemployment and limited consumer spending, so he is taking the slow and steady approach to growing his business.
The slow recovery
If previous recessions are any indication, all signs are pointing to a slow recovery. Looking at previous recessions, there is little chance that the economy will just bounce back to where it once was, especially in the labor market.
For example, the NBER reported that with the 2001 to 2003 recession, the labor market didn’t turn around until 21 months after the recession. Thankfully, the labor market already hit bottom six months after the current recession ended, but the private sector still has yet to gain many jobs back.
To drive home that point, the total number of nonfarm jobs in Whatcom County in September was 77,700, which is 500 fewer jobs than last year and fewer than any month during the 18-month recession, from December 2008 to June 2009.
“We’re all in a hunkering down mode,” labor economist Groepler said. “What’s going to be the spark that gets us out of all this? I don’t know.”