Recessions Come & Go, But Recoveries Are Slow
By Maria Hampton
Recessions are a natural part of the economic cycle. But what shapes the public’s perception of a recession’s severity is how long it takes for the economic recovery and job growth to regain momentum.
In these times of uncertainty, what is certain is the fact that this recovery will be prolonged and slow. There are still many structural changes in the financial sector and the labor force that will need to occur across the country and right here in Louisville. This process will take time, several years at least, to complete.
However, resilience can be fueled by a community’s ability to better hedge and weather the storm, by placing high value on better access to education and job training.
Louisville’s recovery efforts and future economic vitality will be dependent on matching people with higher levels of education and a different or new skills orientation to employer opportunities that align with more 21st century jobs.
This is already slowly occurring. In reviewing data from the Bureau of Labor Statistics, for the period from December 2000 to December 2007, the time between the last two recessions, it is evident that Louisville experienced a notable job sector shift inemployment. The pro rata share of employment in construction, manufacturing, and transportation & utilities sectors declined during this period from 5.4% to 4.8%, 15.7% to 10.7%, and 23.5% to 22%, respectively.
Where did this employment shift go? The shift went to the less cyclical and more recession resistant sectors of Louisville’s economy like professional & business services, health & education, and leisure & hospitality. These groups rose respectively from 10.7% to 12.1%, 10.7% to 14%, and 9.1% to 9.6% of employment.
The beginnings of this employment restructure have provided the foundation to accelerate future job growth and resilience. This advantage plus the recent unprecedented focus on education in our community will expedite our recovery efforts.
Programs spawned by the Mayor’s Education Roundtable have fueled the Greater Louisville Education Commitment. The HIRE Education Forum (Higher Income Requires Education) is bridging the gap between business and academia. These are just two of many plans that will enhance our recovery pace and swell our pride as a very competitive marketplace, while facing difficult and challenging economic headwinds.
We are getting ahead of the game. It is our turn to win the competitive city challenge…and the bases are loaded.
Maria G. Hampton is vice president and senior branch executive of the Louisville Branch, Federal Reserve Bank of St. Louis. Before joining the Fed, Ms. Hampton was president of the Housing Partnership, Inc., a nonprofit corporation focused on creating affordable housing. Prior to that, she was employed 26 years with Bank One Kentucky (formerly Liberty National Bank) as an executive in the areas of retail banking, operations, marketing and strategic planning.