Our View: Economic gloom not well founded

National economists quoted in an Associated Press story published last week suggested the jobs lost in the current economic downturn might not be coming back. This isn’t news as much as it is stating the obvious.

Economies change, and such economic events as a recession, banking crisis and war can make economies change more quickly. But predicting gloom and doom has been a kind of cottage industry of late, and when one confronts some of the speculation with facts, or at least well-reasoned suppositions, the outlook doesn’t look that different from other recessions and recovery cycles.

Some economists argue we won’t go back to pre-recession growth rates because the auto and housing sectors have so shrunk that they will not be able to resume their role as major drivers of the economy and of a subsequent recovery.

Yes, those industries have contracted sharply. They also have gone through a shaking out that makes them more competitive and less laden with debt. Their leaders, managers and CEOs have become more cautious and, we could presume, more aware of the inherent risks their businesses face.

Other economists argue that credit is tighter for small businesses wanting to expand. But all economics is local. In markets like Mankato, dominated by relatively small community banks, the credit appears to be flowing readily. The bank customers and businesses in such places have always been more conservative, and that will prove to be a competitive advantage. While interest rates decline or remain low to assuage Wall Street, conservative and savvy Main Street businesses will be able to take advantage of that.

Just last week, the locally-based United Prairie bank opened a branch in downtown Mankato. A local restaurant company, Mankato Independent Originals, announced the opening of another new restaurant in downtown. If small businesses can’t get credit, it doesn’t appear to be much of a problem here.

The national economists also argued that wealthy people will constrain their spending because the value of their investments is down and average consumers will do so as well because their credit cards are maxed out, or their lines are cut back. We’re not sure this is different than what typically happens in a recession, and while retail spending is down, Mankato’s presence as a regional center mitigates that a bit by drawing from different regions with varying levels of wealth.

Predictions of a continuing high unemployment rate also may be questioned. Much of the unemployment rate rise in the Mankato region has been driven by a higher number of people entering the job market rather than a great reduction in the number of people who have jobs.

In fact, in the Mankato-North Mankato area, there are only 150 fewer people working than there were a year ago, according to the latest statistics. That comes out to 0.02 percent fewer jobs. But because there are 700 more people who entered the labor force, the unemployment rate looks higher.

Clearly, by many measures, the recession many say we are now coming out of has been worse than most. At the same time, it’s difficult to buy into apocalyptic predictions that the American economy will somehow not replace old jobs and old industries with new jobs and new industries.