EDITORIAL: Economy is weak, but this is no 2008

In times like these, it’s easy to get swept up in the emotion of the moment. When the stock market plummeted on Aug. 8 and did so again two days later, many of us found ourselves having flashbacks to 2008, when every bleak day in the market seemed to be followed by another and then another.

To be sure, it could happen again. Panic feeds on itself, after all. But as Steve Jones, an associate professor of finance at Indiana University’s Kelley School of Business, points out, the dynamics this time around are very different.

Back then, he notes, “we were really in a full-out financial crisis. There was a lot of concern whether the financial system would survive or basically wreck itself.”

This time around, the stakes are serious but not as cataclysmic. Americans are exasperated that the recovery is so sluggish and creating so few jobs. And, increasingly, economists are fretting we could slip into a double-dip recession.

Several years of tough economic times have taken a heavy toll on Americans, especially the jobless. Consider these bleak statistics cited by economist Paul Krugman, a columnist for The New York Times: In June 2007, about 63 percent of adults were employed. At the official end of the recession in June 2009, the figure had fallen to 59.4 percent. And as of June 2011—“two years into the alleged recovery,” Krugman notes—the number was 58.2 percent.

Yet few experts believe the economy and the stock market are in the same peril today that they were during the depths of the financial crisis.

The challenge today is coming to grips with the reality that things are unlikely to get dramatically better for a long time, perhaps years. That’s not easy for a society to accept after seeing its standard of living march higher for decades.

In retrospect, we all should have recognized that the stock market had become overly frothy. Why should we have been surprised, for instance, by the drumbeat of bad news coming out of HHGregg Inc. in recent months? The company lives off the sale of big-ticket consumer products like dishwashers, and consumers are strapped for cash.

It all goes back to the collapse of the housing market which deflated property values. “Never before have you seen consumer balance sheets so destroyed,” Jones said, “and that is what is making this recovery so sluggish.”

Dreaming big on east side

The east-side site that once was home to a Duracell battery factory employing 1,500 doesn’t look like much these days.

Thankfully, city and redevelopment leaders are able to look beyond the boarded-up buildings at Washington and Gray Streets and see something more grand—a catalyst for reviving a beaten-down corridor.

As IBJ reported last week, Southeast Neighborhood Development and the city want to redevelop the property for light industrial uses—potentially providing hundreds of jobs to an area that badly needs them.

It’s a monumental, messy undertaking, one we applaud. Redeveloping the city’s industrial eyesores doesn’t just remove blight. It rebuilds neighborhoods.•

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