Hudson River Valley Economy Improving, but Still Weak, Marist Research Report Finds
POUGHKEEPSIE (June 12, 2013) – The Hudson River Valley economy is slowly improving but remains weak, according to a new Marist economic report released today. Nationally, the report found that since the end of the Great Recession in June of 2009, gross domestic product (GDP) has grown slightly less than 2 percent per year. That’s high enough to maintain the current level of joblessness, but not of sufficient magnitude to provide full employment, according to the latest report from the Marist College Bureau of Economic Research, which looks at national and regional economic trends for the Hudson River Valley for the first quarter of 2013.
Continued contraction in public-sector spending and employment is adding to this weakness as is the household sector’s unwillingness to forego savings or incur debt to support current consumption. “There are pockets of growth in both the national and regional economies,” said bureau Director Dr. Christy Huebner Caridi, “and the housing sector has begun to build a sustainable bottom, but overall economic activity will not fully recover until the average household sees sustained income growth.”
The Great Recession exposed many flaws in the U.S. economy, starting with the persistent shift away from wage, salary, and benefit income – collectively, earned income – in favor of profits and ending with the use of debt as a substitute for earned income growth. Over the past 20 years, earned income as a percent of national income has fallen at an annualized rate of 0.29 percent while profits have grown 0.56 percent per annum.
This trend accelerated during the most recent 10-year period, with earned income as a share of national income falling 0.43 percent per annum while profits grew 0.64 percent per annum. As of 2011, wages, salaries, and benefits accounted for 55.20 percent of national income, and profits accounted for 25.20 percent, compared to 57.40 percent and 23.60 percent in 2002 and 58.30 percent and 22.30 percent in 1992. Over the same time periods, employment and job growth have stagnated and unemployment has risen.
During the 20-year period ending in 2011, the regional labor force grew 0.55 percent per annum compared to a 0.50 percent per annum growth in employment. Over the more recent 10-year period, both the labor force and employment witnessed negative rates of growth at 0.06 percent and 0.31 percent, respectively. Because employment declined at a faster pace than the contraction in the labor force, the number of unemployed workers grew 4.38 percent per year. Coincident with the weak regional labor market was a contraction in public sector employment and a private sector that grew at an annual rate of 0.14 percent.
The long-term weaknesses outlined above continue to impact the regional economy, the report shows. Over the most recent 12-month period, labor force participation and employment was essentially unchanged and, while the private sector added 7,100 jobs, the job count in the public sector continued to decline (-2,800). Overall, labor force participation increased (667) from 1,114,567 participants in the first quarter of 2012 to 1,115,233 in the first quarter of 2013; employment increased (1,133) from 1,026,633 to 1,027,767; and the regional job count advanced (4,300) from 883,533 to 887,833.
As noted in previous reports, employment and labor force participation peaked in July of 2008—seven months after the start of the Great Recession – at 1,128,600 and 1,189,600, respectively. Employment reached a post-recession low in February of 2012 at 1,024,400 while the labor force bottomed out a year later (March of 2013) at 1,109,100. From peak to trough, employment contracted 9.23 percent (104,200) and labor-force participation fell 6.77 percent (80,500). Similarly, the private sector job count peaked in the second quarter of 2008 at 756,433 and reached a post-recession low in the first quarter of 2012 at 697,233. From peak to trough, the private-sector job count fell 7.83 percent (59,200).
As of April 2013, the region has recaptured 3.73 percent (3,000) of the labor force lost to the recession, 14.88 percent (15,500) of the employment lost, and 55.00 percent (33,067) of the private-sector jobs lost. Overall, the regional economy remains weak.
View the full Economic Report of the Hudson Valley, First Quarter 2013, and other Marist College Bureau of Economic Research reports at http://www.marist.edu/management/bureau/.