The Massachusetts Economic Glass is Definitely Not Half Full

There's been a fair amount of happy talk about the Massachusetts economy in the local news media in the last few weeks. Mostly of the "glass half full" variety ... like, "sure most major industries are in free fall round these parts, but biotech is doing fine!" However no single industrial sector or small group of industrial sectors is going to assure an upswing in our economic fortunes. Nor is any erstwhile solution that doesn't create good public sector jobs and rebuild the tattered state and federal social safety nets. And there's no better reminder of this fact than to look at the most recent numbers for a few basic economic indicators for our region. Naturally, I do not mean "indicators" that tell us about how stock trading is going for major corporations or some such. I mean core economic indicators that directly reflect upon the fortunes of working families. So perhaps an examination of unemployment numbers is the best place to start.

The May unemployment figures for Massachusetts won't be out for several days, but the April numbers continued a trend of rising joblessness - with our official state figure reaching 8 percent. Up from 7.4 percent the previous month. To put this in perspective, we haven't had such high unemployment in the Commonwealth in a generation. Of course, for those in the know, these numbers are much worse than they appear at first blush. Unlike more enlightened industrialized nations around the world, the U.S. government and most state governments fudge our unemployment figures so that people who have run out of unemployment insurance and given up looking for work are dropped from the count. Ditto underemployed people - who need more work and/or better wages and can't find them. According to progressive economists, real unemployment in the U.S. and states like Massachusetts can be safely estimated by doubling the official figures. This means that Massachusetts unemployment is more like 16 percent right now and likely to rise in the months to come.

People without work or enough work have a funny way of running out of money fast in an economic moment when credit is contracting and people are unable to save as they vainly try to keep up with monthly payments on mortgages (and credit cards) to giant private banks that have all received billions of dollars in public money over the last little while. As family incomes collapse, people fail to make their payments and the banks foreclose on their homes. As unemployment continues to rise, the downward economic spiral accelerates, and the foreclosure numbers reflect this. The worst three months for foreclosures on record nationally in recent times were March, April and May of this year. May was a little better than April, but still bad.

Massachusetts had 3241 foreclosures in May - giving us the 20th highest foreclosure rate in the nation. For those interested in adding salt to the open wound of our housing crisis, it's worth checking out the realtytrac.com website and looking at the foreclosures in Suffolk County last month. You won't see a whole lot of listings from wealthy parts of town like Beacon Hill or the Back Bay. No indeed, what you'll see is a depressing list of houses and condos in working class parts of town - and in many cases working class neighborhoods of color - where the damage caused by the sub-prime lending crisis continues unabated. "Dorchester." "Dorchester." "Roxbury." "Dorchester." "South Boston." "Chelsea." "Mattapan." On and on the list runs. For page after page. And that's just one month.

For even more fun with numbers, the latest Beige Book economic outlook for the Boston Region of the Federal Reserve is quite plain in its analysis. According to the Associated Press, "Almost all manufacturers say activity continues to drop, and they are cutting capital spending, employment or hours. Nearly half of respondents have taken steps to rein in employee compensation through pay freezes or benefit reductions. However, there was a bright spot in manufacturing: biopharmaceutical sales continue to increase 'strongly.'

"A majority of retailers reported modest sales increases from a year ago. One noted an increase in credit card "declines" as customers hit their credit limits. Residential and commercial real-estate markets remain in the "doldrums," with declines in prices and sales. Some exceptions: home sales in New Hampshire increase about 10 percent year-over-year. Bank-owned properties were a big part of the increase; and the median home price in Massachusetts increased 8 percent in April, from March."

To translate those parts of the preceding quote that may seem a bit opaque, the New England economy - which is anchored by the Massachusetts economy - is crashing. Employers are slashing jobs and wages in most productive sectors. Sales are essentially flat in the retail sector. The real estate sector is continuing to go down - except for the somewhat warm market in foreclosed homes, which has temporarily tweaked up the median home price in the Bay State. Profit being made on other people's misery? Hey, its the American way! One supposes.

So what is one to make of all this? Stupid Globe articles on how peachy freakin' keen it is that employers are making up for destroying jobs by bringing in better lunch food aside. The main lesson is the same as it ever was ... we need progressive taxation and significant government intervention on behalf of working families instead of corporations and the rich. Without money in the pockets of the vast majority of Massachusetts residents, there will be no fast "turnaround" of this down economy. Consider this more food for thought as we await the next wave of cuts and regressive taxation by our neoliberal state government as the 2010 budget debate reaches its climax in the weeks to come.

Jason Pramas is the Editor/Publisher of Open Media Boston.