What Grows in a Recession?

November/28/2008 2:00AM
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Not much. The stock market surely doesn’t. Citicorp is laying off 50,000 more workers, so employment opportunities aren’t growing. Tweeters and Circuit City are both in chapter 11, so the retail trade is down. Oil prices are back down, so energy demand is not growing. Mines are cutting back, so coal demand is shrinking. Tax revenues are going to be way down, since taxable incomes,sales, capital gains, gasoline taxes, and other tax revenue streams are sinking. Car sales are off. Appliance sales are off. OK, I give up, what grows in a recession?

Government jobs, for one. New York City added 40,000 jobs this year to a record of 313,965, this according to the Wall Street Journal. This should have gotten Bloomberg an extra term as mayor, right?  Of course, New York City is going to be asking for a bailout by early next year. University salaries are going up. College tuition is going up. Teacher salaries are going up. Union pay that is part of a contract is going up by contract requirement. Tickets for professional sporting events are going up along with the athletes’ salaries. Government spending is going up faster than anything. At all levels.

How long can the areas that are going up, go up in a down economy? Of those mentioned, probably only professional sports tickets will come down. It’s hard to believe unemployed workers will spend food money on baseball tickets. But, the fools who own those teams will continue to bid up the salaries since the teams are just hobbies for billionaires. Until the asset value of the teams begin going down, they can lose money and sell the team and come out ahead. The Steelers are worth a billion dollars.

The rest of the list, no change. Look at Michigan. The state has been in trouble long before it hit the fan for the rest of us. What grew? Government employment. And, the honorable governor is on the Obama  economic advisory board. What great advice she is putting forth. Maybe even better advice from the new Chief of Staff, Rahmmie Ram Jet, who has been quoted as saying : “why waste a good crisis”?

Governments at all levels will grow. Government spending at all levels will increase. Pouring down from the top. Tuition will go up as tenured professors and local teachers hang on and gain pay increases. Private universities will dip into endowments funds to keep the pay up. Amazing how certain areas can defy gravity, isn’t it?

Americans have lost at least 50% of the collective wealth in housing prices and asset values. Many have lost jobs. The fools we elect protect themselves and their cronies. How nice.

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