Economic Recovery Is In The Eye Of The Beholder

A year after the collapse of Lehman Brothers and the beginning of the financial crisis, host Scott Simon talks with Joe Nocera of The New York Times about the latest unemployment numbers and the pace of the recovery.

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SCOTT SIMON, host:

This is WEEKEND EDITION from NPR News. I'm Scott Simon.

U.S. Labor Department released new unemployment figures yesterday. The country's jobless rate hit 9.7 percent last month for the first time in 26 years. The department also cited 216,000 jobs lost in August. That number's actually less than the number in July.

We're joined now by Joe Nocera, author of the Talking Business column in the New York Times, joins us from the studios of the Radio Foundation in New York. Joe, thanks for being with us.

Mr. JOE NOCERA (New York Times): Oh, thanks for having me, Scott.

SIMON: Is this bad news in any way moderately good news?

Mr. NOCERA: Well, believe it or not, that certainly is how it's being portrayed by economists, who were saying, look, you know, six months ago it was 500,000, then it was 300,000 per month, now it's 216,000. So the rate - as they like to say - the rate of job loss is declining.

And most economists also think that it helps signal that we're coming out of the recession. But you know, this is what they call a classic jobless recovery. In 2001, when we had a similar situation, it really took a couple of years after the end of the recession when we actually had economic growth before companies started hiring again.

And given how nervous companies and executives are about the state of the economy, it seems virtually a sure thing that the same will happen this time.

SIMON: A year ago - the Lehman weekend, the lost Lehman Brothers weekend, we might call it, when they collapsed.

Mr. NOCERA: Yes. I named it that.

SIMON: Did you? Oh, when I say they, I meant you. I beg your pardon. Well, Joe, as a wise man once said - if I might put it that way. But this raises the question: A year later, is Wall Street doing better than Main Street, and what are the implications of that?

Mr. NOCERA: Well, Wall Street certainly is doing better right now. You surely saw that Bank of America has publicly announced that they are prepared to give back at least part of the TARP money, which means that their profitability and their capital ratios are good enough now that they can hand some of the money back and that there is kind of a general, a growing confidence.

My understanding is that even at Citibank, there's a feeling that they could start giving the TARP money back soon, you know, once it becomes politically - a politically viable thing.

So you know, on the one hand, Wall Street is doing better than Main Street. On the other hand, you know, you kind of need a healthy Wall Street if we're going to get credit markets back up and running.

And in particular, Scott, what's called the shadow banking system, the securitization system, people don't realize that for all the complaints about bank loans, you know, at least half the loans made in this country used to go through securitizations and they would be securitized, which allowed for more lending. And that is dead, completely dead.

And until that starts to revive, you're just not going to have a full-throated, happy recovery. Because, you know, loans need to start being made again. And that's why it's so important that Wall Street revive.

SIMON: Vice President Biden has been on the hustings giving great credit to the stimulus package. What's your assessment?

Mr. NOCERA: How do you prove a negative? You know, that's really my assessment. We just don't know whether it prevented things from being much worse. My instinct is that it did but it's so on the margin that, you know, it's almost an act of faith at this point.

If you're a Democrat and you want to believe in the stimulus, you can. If you're a Republican and you want to scoff at it, you can. And no one will ever know what the truth is.

SIMON: Joe Nocera, who writes the Talking Business column in the New York Times and is a remarkable phrase maker, joining…

(Soundbite of laughter)

SIMON: …joining us from the Radio…

Mr. NOCERA: I'll never do that again.

(Soundbite of laughter)

SIMON: …joining us from the Radio Foundation in New York. Thanks so much, Joe.

Mr. NOCERA: Thanks a lot, Scott.

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