“We still have a lot of strengths, from a culture of entrepreneurship and venture capitalism, to flexible labour markets and attracting immigrants,” said Barry Eichengreen, an economist at the University of California, Berkeley. “But we’re going to be living with the overhang of our financial and debt problems for a long, long time to come.”
New shocks could push the nation into another recession or deflation.
“We are in a situation where our vulnerability to any new problem is great,” said Carmen M. Reinhart, a professor of economics at the University of Maryland.
So troubles ripple outward, as lost jobs, unsold houses and empty offices weigh down the economy and upend lives.
In 2005, Arizona ranked, as usual, second nationally in job growth behind Nevada, its economy predicated on growth. The snowbirds came and construction boomed and land stretched endless and cheap. Then it stopped.
This year, Arizona ranks 42nd in job growth. It has lost 287,000 jobs since the recession began, and the fall has been calamitous.
Renee Wheaton, 38, sits in an old golf cart on the corner of Tangerine and Barley Roads in her subdivision in Florence, an hour south of Phoenix. Her next-door neighbour, an engineer, just lost his job. The man across the street is unemployed.
Her family is not doing so well either. Her husband’s hours have been cut by 15 per cent, leaving her family of five behind on water and credit card bills - more or less on everything except the house and car payment. She teaches art, but that’s not much in demand.
“I say to myself ‘This can’t be happening to us: We saved, we worked hard and we’re under tremendous stress,”’ Ms. Wheaton says. “My husband is a very hard-working man but for the first time, he’s having real trouble.”
Arizona’s poverty rate has jumped to 19.6 per cent, the second-highest in the nation after Mississippi. The Association of Arizona Food Banks says demand has nearly doubled in the past 18 months.
Elliott D. Pollack, one of Arizona’s foremost economic forecasters, said: “You had an implosion of every sector needed to survive. That’s not going to get better fast.”
To wander exurban Pinal County, which is where Florence is located, is to find that the unemployment rate tells just half the story. Everywhere, subdivisions sit in the desert, some half-built and some dreamy wisps, like the emerald green putting green sitting amid acres of scrub and cacti. Signs offer discounts, distress sales and rent with the first and second month free.
Discounts do not help if your income is cut in half. Construction workers speak of stringing together 20-hour weeks with odd jobs, and a 45-year-old woman who was a real estate agent talks of her job making minimum wage bathing elderly patients. Many live close to the poverty line, without the conveniences they once took for granted. Pinal’s unemployment rate, like that of Arizona, stands at 9.7 per cent, but state officials say that the real rate rises closer to 20 per cent when part-timers and those who have stopped looking for work are added in.
At an elementary school near Wheaton’s home, an expansion of the school’s water supply was under way until thieves sneaked in at night and tore the copper pipes out of the ground to sell for scrap.
Five miles southwest, in Coolidge, a desert town within view of the distant Superstition Mountains, demand has tripled at Tom Hunt’s food pantry. Some days he runs out.
Henry Alejandrez, 60, is a roofer who migrated from Texas looking for work.
“It’s gotten real bad,” he says. “I’m a citizen, and you’re lucky if you get minimum wage.”
Mary Sepeda, his sister, nods. She used to drive two hours to clean newly constructed homes before they were sold. That job evaporated with the housing market. (Arizona issued 62,500 housing permits several years ago; it gave out 8,400 last year.)
“It’s getting crazy,” she says, holding up a white plastic bag of pantry food. “How does this end?”
You put that question to Mr. Pollack, the forecaster.
