Is Our Economy Out of the Recovery Room?
Written By: David Augustinho
September 27th 2013
Ah the good old days, specifically early 2008, before Lehman Brothers tanked and we all learned what a credit default swap was. Even if we didn’t know exactly what it was, we sure knew that it was a very bad financial instrument.
The Massachusetts Economy was doing very well in 2008, having recovered from the dot com bust in the 2000-2001 time frame. Happy days were here again…then oops, suddenly, it was more like here we go again.
From 2008-2009 we lost almost 4% of the jobs in our region. We went from 91,461 jobs down to 88,361. We lost almost 1,000 jobs in the construction industry alone. We lost another 1,000 jobs in retail.
Only one sector in our economy maintained or added jobs, and that was health care and social assistance. Our accommodation and food service industry was another bright spot losing less than 100 jobs from 2008 – 2009.
Clearly it has been a long, slow climb for our economy. The employment picture has done pretty much what economists predicted it would do when the recession took effect. That is, recover, very, very, slowly.
From 2009 to 2010 we gained 170 jobs. From 2010 to 2011 we only added 33 jobs. But the pace picked up in 2012 adding 1,873 jobs, and here in 2013 we added 1,261 total jobs.
Today we have 267 more jobs in our economy than we had in 2008. Growth has not been consistent across all sectors of our economy; so where has the economy gained jobs over the past five years?
Well we have added over 1,000 jobs in the accommodation and food industry. Our hotels and restaurants, which only lost 78 jobs in 2008, have been adding jobs ever since. In 2012 they added over 500 jobs. In the five years since 2008 the Cape has added 7.7% to these hospitality jobs while the country only added 5.8%.
The health care and social assistance sector also added about 1,000 jobs to our economy since 2008. Many of these positions were added in the social assistance area rather than the health care portion. We trail the national growth pattern is this sector. The country increased jobs in this sector by 10% while the Cape has only added about 7% in health care and social assistance.
The construction industry has recovered only about a quarter of the jobs lost in 2009. Only 243 jobs have been added in construction in the past 4 years. And while these construction industry losses are significant they are not as bad as the national figures.
The Cape lost about 13% of our construction jobs from 2008 to 2013 while the U.S. lost 19% of construction employment. In raw numbers, national construction jobs dropped from 7.1 million to 5.7 million.
I have included a chart that shows the number of jobs in the various sectors of our economy in 2008 and in 2013.
So the answer to the question of whether or not our economy is out of the recovery room is “yes”. We have definitely turned the corner. Not every sector is what it was in 2008; some may never look the same. But, in general, our jobs picture is healthy and the prognosis is for continued improvement.