Stormy ride for economy

Self-confidence and optimism keep Mike Weichman from becoming discouraged. The depressed job market has directly affected him. A tumultuous year beginning with the Sept. 11 attacks and including public disclosure of bad accounting practices by several major corporations jarred an already reeling economy.\nWeichman, a 2001 IU graduate, is without a job and along for the bumpy ride.\nHe sizes up his situation and sees a wall ahead.\n"The economy is terrible," Weichman said. "It's a very tough time. A lot of big corporations aren't hiring right now. To get an interview you need to know someone right now."\nWeichman is originally from Chicago. After graduation he worked for Network Plus in the World Trade Center. A week before Sept. 11 he left the company to join 1 800 Gift Certificate as a national account executive. By changing jobs he escaped the fate of his friends from the Boston-based company. They took a double dose of misfortune when they saw firsthand their office become consumed in the carnage of the terrorist attacks and then lost their jobs about a month later when Network Plus filed for bankruptcy.\nMonths later, Weichman was laid off too. And he is still looking for a job. As for his friends, one promotes a book he wrote, the other moved home to North Carolina and is still without a job.\nBecause more people find themselves out of work and in competition for scarce openings, the job search is grueling and it can take many months to land work.\nWeichman remains determined. "If you put your mind to it you can get a job," he affirms. "I feel like I have a big wall in front of me and I have to get over that wall."\nWeichman is justified in envisioning a wall in front of him. Layoffs have been fairly widespread since the government declared a recession in 2001. In addition, corporate profits, with the exception of the fourth quarter in 2001, have decreased every quarter since 1999, according to the Bureau of Economic Analysis.\nBecause companies are generally making less money they have had to cut costs. In addition, confessions by several large businesses that they have for years disguised significant losses in tricky accounting techniques has forced heavy trading on the stock market. The Dow Jones industrial average has experienced a particularly volatile year, seeing its largest one-day point loss (685 points on Sept. 17), one-week point loss (1,369.7 points from Sept. 17-21) and busiest trading day (2.81 billion shares on July 24).\nDespite this seemingly dark news from Wall Street, other economic indicators provide a calmer forecast.\nGross Domestic Product, a monetary measure of everything produced in the United States, has increased three quarters in a row. Consumer spending, another strong indicator of economic well-being, has remained virtually unaffected by the recession. It dipped at the turn of the century from its high levels in the late 1990s, but has shown consistent growth, particularly in the fourth quarter of 2001 when many auto manufacturers gave consumers incentives to buy cars with no interest.\n"We are not in recession by all the indicators that we see around us," Rudy Professor of Economics George von Furstenberg said. The problem economists have with deciphering what is going on is that mild upswings do not always denote the end of a recession, he said. Instead they can actually represent the eye of the storm before the economy again performs poorly as part of a "double-dip" recession. But von Furstenberg pointed to both healthy housing and car sales and expects increased government spending to soon prop the economy. \n"I think we are out of recession," he said. "I don't think there will be a double-dip and I think we'll find that we are and have been out of recession for several months."\nMost Bloomington business owners would likely agree.\nIn southern Indiana, like in much of the country, the psychological effects of Sept. 11 have kept many people on the ground. Vacationing by car is the way to go and the region has seen significant growth this year.\n"We can see 11 percent growth in comparison to last year," said Valerie Pena, executive director of the Bloomington Convention and Visitors Bureau.\nA new marketing plan targeted at the major cities within Bloomington's five-hour radius (Chicago, Cincinnati, Columbus, Louisville and St. Louis), plays high on both IU and nostalgia.\n"We wanted to bring alums and parents of students back to a time when things were casual and loose," Pena said. "We also had a strong emphasis in youth sports activities."\nTourism is the third largest industry in the Bloomington area, bringing in $225 million a year to the local economy with the help of 3,700 employees. The fun, close-to-home, university atmosphere has ensured that the Convention and Visitors Bureau's marketing plan has been successfully implemented.\nConvention spending is the only area of Pena's business affected by the recession. Government groups generally constitute a large portion of convention spending. Because of some questionable economic decisions at the Federal level and spending for the War on Terrorism, the groups have been resigned to less expensive conferencing measures as the government has gone from predicting a surplus to a deficit.\nA tariff on foreign steel has had the effect of raising the price of American steel and a $51.7 billion subsidy for American farmers doesn't appear wise now that the government is predicting a deficit.\n"I think the government did its political best to take measures that are politically popular but economically unwise," said von Furstenberg, who thinks the tariff and subsidy weaken the United States' position going into global free-trade negotiations. War can also have a substantial affect on the economy, he said.\n"What is true is that generally risk premiums tend to go up when you're facing increased international security, which has a chilling effect on investment," von Furstenberg said. "(You're unlikely to invest) if you're uncertain as to how things play out, and how demand shifts and what a quarter million in Iraq means for oil prices."\nSo the people producing the nation's corn and steel may be happy at the moment, while those buying grudgingly incur the costs. And as more fighting appears imminent and people are generally uncomfortable, Pena's business will thrive while Weichman and his friends trudge on to the next interview.