With Friday's announcement that the U.S. economy grew by 5.7 percent in the fourth quarter of 2009, a Ball State University economist believes the worst is over, but the job market won't catch up for a few months.
Michael Hicks, director of the Center for Business and Economic Research, said the growth is good news, but it won't have an immediately visible affect. He said the economy has acted the same way in a majority of recessions in the past 40 years. The economy isn't shrinking anymore, but the job market will lag for the better part of a year.
'It's very reasonable to expect that the job market will continue to behave very sluggishly, at least until summertime,' he said.
Recessions are bittersweet for colleges and universities. Like many universities across the country, Ball State has seen an increase in enrollment as more people seek a college degree or graduate school during recessions.
The higher demand for education is good for Ball State, but state schools are largely dependent on state revenues, which are facing significant budget constraints in the near future. Hicks said the state budget may not recover for two or three years.
The U.S. Commerce Department put the growth of the gross domestic product in the fourth quarter of last year at its fastest pace since 2003, according a press release.
Hicks said at 5.7 percent growth it would take the economy about 12 years to double its size and production. However, that is a fast pace and not plausible to sustain. Economies usually see rapid growth following recessions, he said.
'It's not as optimistic a number as what would be the case during a fairly long expansion,' Hicks said.
The state of the U.S. economy as a whole isn't necessarily indicative of a local economy, he said. Some places always will do better than others. Tough as it has been, Muncie hasn't had economic hardship on the level of many other places in the country. Some companies in the area have already experienced the end of the recession and are starting to see better numbers.
The end of the recession means the 'end of the worst day,' Hicks said. Just because the economy has hit its low point and is no longer shrinking, it doesn't mean it's growing. The economy is in a period in which it won't exhibit much perceivable growth.
'Things are looking up,' he said. 'But it's not going to feel like it's looking up for several months at the very least.'
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