Economic Perception vs. Reality
July 2, 2009, 10:04 PM
As economists continue to study the trends, Americans are wondering whether the recession has hit rock bottom or is turning the corner to better times.
Indicators continue to be mixed. Home sales have improved nationwide, but experts predict unemployment rates will continue to rise.
When the economy turned south, it was often said it would stretch from Wall Street to Main Street. And that's certainly been the case, although some regions have fared better than others.
"Here in KELOLAND, we've been really lucky. We have lower rates of unemployment than the rest of the country. We still have people here that are hiring and we really are, so far, really missing out on the worst of this downturn,” Reynold Nesiba, associate professor of economics at Augustana College, said.
That's despite an unemployment rate that's hit five percent, more than double the rate of nine years ago. But still, many South Dakotans say they're doing okay.
"I haven't had too much trouble and people I know haven't had too much trouble. So, even though we may not be living the most elaborate lives we would have, had times been better, I think we're doing alright," Bethany Rasmussen said.
And perhaps that attitude could help boost the economy. A large part of an economy's health is consumer confidence, which trended back up in May, only to fall again in June.
"Perceptions do matter. And that if people are becoming more optimistic, and they act on that, in a way that they're going out and deciding now is the time to buy a new car, now is the time to buy a new house, that can help," Nesiba said.
In fact, that attitude can spark a whole cycle of economy.
"So if consumers are more confident and they go out and spend more, firms will respond by producing more," Nesiba said.
Which, in turn, leads to more jobs. But Nesiba says the progress perception can spark can be limited by outside factors, like debt and minimum wage growth.
"People have really cut back on spending. Generally, they're a little more cautious about borrowing money to buy a new house, buying bigger furniture or appliances or to spend unnecessarily. So, at least the people I talk to, are still pretty cautious," Nesiba said.
Rasmussen is one of those cautious spenders. She and her fiancé are planning a wedding and sticking to a budget.
"It might have helped how we've planned things out, realizing it could be very easy that we could be in trouble," Rasmussen said.
And given the current circumstances, she's glad to have what she has.
"Overall, I think I just feel very lucky to have a job, to be employed, that Drew has a job. We haven't been laid off or had to take jobs we wouldn't necessarily want to," Rasmussen said.
A positive attitude that just might help spark economic recovery, even if it's a long road to get there.
"The sooner that people are able to get back to work and take care of their families, the better off we all are," Nesiba said.
A recent study by the Institue for Supply Management showed that for the eighth straight month, South Dakota’s economy was retracting but now at a lesser rate. That finding also concluded that the unemployment rate will continue to rise.
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