Seminar: The Economic

Recovery and It’s Local Impact

Taggert J. Brooks, PhDAssociate Professor of EconomicsUniversity of Wisconsin-La Crosse

I’ll pretend to know, but I probably don’t. The views expressed today might be my own, however they probably do not reflect the views of the sponsors, my employer, or my parents.

Disclaimer:

Began late summer 2009

Expect it to be slow.

The Recovery

1-Jan-05 1-Jan-06 1-Jan-07 1-Jan-08 1-Jan-09 1-Jan-10 0.5

0.8

1.0

1.3

Google Search Index: “Flooring, Doors, Concrete, Construction, Tile”

Construction

Manufacturing

Information

Business Services

Wholesale

Transportation and Utilities

Mining

Retail

Finance

Leisure

Other

Government

Education

Heath care

-40% -30% -20% -10% 0% 10%

Net Job Changes as % of Employment in Sector

1 2 3 4 5 6 7 8 9 10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

-8

-6

-4

-2

0

2

4

6

8Postwar Recessions: Cumulative Decline from NBER

Peak (pct)

1957

1948

1953

2007

1 2 3 4 5 6 7 8 9 10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

-7

-6

-5

-4

-3

-2

-1

0

1

2Postwar Recessions: Cumulative Decline from NBER

Peak (pct)

1990

2001

2007

Jan-80 Jan-83 Jan-86 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-100.00

2.00

4.00

6.00

8.00

10.00

12.00

< 5 Weeks

5 to 14 Weeks

15-26 Weeks

>26 Weeks

Unemployment Rate by Duration

Source: BLS

Jan-80 Jan-83 Jan-86 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-100%

25%

50%

75%

100%Percent of unemployed by unemployment duration

< 5 Weeks

5 to 14 Weeks

15 to 26 Weeks

> 26 Weeks

Source: BLS

Jul-67 Jul-74 Jul-81 Jul-88 Jul-95 Jul-02 Jul-090

5

10

15

20

25

Median Duration of Unemployment (Weeks)

1950

1951

1952

1953

1954

1955

1956

1957

1958

1959

1960

1961

1962

1963

1964

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

18

20

22

24

26

28

30

Median Age at First Marriage

Male

Female

The Gender Effects of Recessions

“Man-cession”

Jan-48 Jan-55 Jan-62 Jan-69 Jan-76 Jan-83 Jan-90 Jan-97 Jan-04-4

-3

-2

-1

0

1

2

3

4 Male Unemployment Rate - Female Uenmployment Rate

1981 1991 2001 2007

-7.0%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

Recession

Male Cumulative Job LossFemale Cumulative Job Loss

Manufacturing

Construction

Business Services

Retail

Finance

Leisure

Wholesale

Transportation and Utilities

Information

Other

Mining

Government

Education

Heath care

-10% 0% 10% 20% 30%

Sectoral Share of Total Job Losses

0

2,500

5,000

7,500

10,000Total Enrollment in Higher Education by Gender

Th

ou

san

ds Male

Female

Public perception of reform

Health Care Reform

Improve it

Makie it Worse

Have No Ef-fect

Unsure

- 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0

Increased Gov't Involvement in Healthcare Will...

*Source: htttp://www.pollingreport.com/health.htm

Increase

Decrease

Remain the Same

Unsure

- 10.0 20.0 30.0 40.0 50.0 60.0

The Amount You Will Pay For Medical Care Will...

*Source: htttp://www.pollingreport.com/health.htm

The “problems” and their local impact

Health Care Reform

Myth

Businesses are less competitive because of the burden of health care.

1960

1965

1970

1975

1980

1985

1990

1995

2000

National Compensation Measures as a Share of GDP, NIPA 1960-2006

Source: Kaiser Family Foundation analysis of data from the U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, 1960-2006, Tables 1.1.5, 2.1, 6.11B, 6.11C, & 6.11D, 2008.

2006

Wages

Other Fringe Benefits and Payroll Taxes

51.8%

Private Group Health Insurance

0.6%

3.8%

45.6%

4.1%

6.7%

56.3% of GDP

56.4% of GDP

Myth

Costs are rising more rapidly than other countries.

KoreaIrelandPoland

NorwayGreece

United KingdomSpain

Czech RepublicAustriaMexico

NetherlandsBelgium

United StatesNew Zealand

FranceJapan

DenmarkCanada

SwitzerlandSwedenFinland

GermanyItaly

Iceland

0 1 2 3 4 5 6 7 8 9 10

1990-2007 Average annual % change in total health expenditure per capita, $PPP (OECD)

“If something can't go on forever, it won't.“

~Herb Stein

Problem

US has highest per capita health spending

United StatesFrance

SwitzerlandGermanyBelgiumAustriaCanada

DenmarkNetherlands

GreeceIceland

New ZealandSwedenNorway

ItalySpainUnited

KingdomFinlandSlovak RepublicIrelandHungaryCzech RepublicKorea

PolandMexico

0 2 4 6 8 10 12 14 16 18

2007 Total Health Expenditure as a % of GDP

United States

Australia

Ireland

United Kingdom

Spain

0 5 10 15 20 25 30

High Income

High Dispersion of Health Insurance aka “Incentives”

High Technology

Economic Explanations

$10,000 $20,000 $30,000 $40,000 $50,000$0

$2,000

$4,000

$6,000

$8,000

GDP Per Capita $PPP

To

tal

exp

en

dit

. o

n h

ea

lth

/ca

pit

a,

$

PPP France

US

Korea

$10,000 $20,000 $30,000 $40,000 $50,000$0

$2,000

$4,000

$6,000

$8,000

GDP Per Capita $PPP

To

tal

exp

en

dit

. o

n h

ea

lth

/ca

pit

a,

$

PPP France

US

Korea

None of the proposals will address these issues. Expect expenditures to increase.

Local Impact

Long Term Fiscal Problems

Medicare and Social Security.