Columbian's Warranted Skepticism on the Recovery

Today's editorial in the Vancouver Columbian, Hold the Confetti, shows good perspective. Noting that this has been a feel-good week - the Dow topped 10,000! - the editorial board reminds us that we've a long way to go and it may take us a long time to get there.

...we’ll keep our confetti in the bag, for several reasons. Let’s remember that what happened on Wednesday actually occurred for the first time more than a decade ago. The Dow first hit 10,000 on March 29, 1999. So it’s nothing new. Also, on the national level, the economy still has a way to go before reaching the Dow’s all-time high of 14,164 set two years ago this month (on Oct. 9, 2007).

On the local level, there’s even more reason to stifle any celebration of an economic recovery. The recovery simply hasn’t kicked in around these parts. About the only thing anyone can brag about is that we’re bleeding less profusely.

Moreover, as the Seattle Times reports, bad commercial loans are hammering the state's banks, most recently Sterling Savings Bank. The larger construction picture is disturbing.

The Seattle-Bellevue-Everett metro area had the nation's highest delinquency rate for construction and land loans in the second quarter: 32.7 percent, four times the rate of a year earlier, according to Foresight Analytics, an Oakland, Calif.-based research firm. Tacoma, at 28.9 percent delinquent, was fourth highest.

Arun Raha, the state's top economist, warned of the problem in his most recent economic and revenue forecast.

The recovery is still fragile, and fraught with risk. Credit conditions continue to ease, but we cannot rule out a secondary round of credit contraction as regional and local banks are hit with deteriorating asset quality due to the slump in commercial construction.

Job creation must remain the top priority for state and national lawmakers. For a dramatic depiction of the employment situation see the geography of jobs. Devastating graphics.