
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, July 16, 1990                   TAG: 9007160071
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A1   EDITION: METRO 
SOURCE: The New York Times
DATELINE:                                 LENGTH: Medium

16 STATES CLOSE TO RECESSION

The national economy has become so sluggish that 16 states, with more than a third of the nation's population, are in a recession or close to one, an analysis of employment data shows.

And throughout the country, people are talking of stagnant wages, falling real estate prices, deeply indebted corporations and jobs that are getting harder to find.

But the economic statistics collected by the federal government do not confirm that a national recession exists.

Instead of a classic recession, which is defined as two consecutive quarters of a decline in output and a surge in unemployment, the statistics portray an economy that has been expanding for nearly nine years and continues to do so, although slowly. That has left a number of economists searching for ways to characterize the hardships that afflict the American economy.

"There are many problem areas and only a few pockets of prosperity, none very inspiring," said Clair Asklund, an expert in regional economics at DRI/McGraw-Hill, an economic consulting firm. "Most of the country is slipping back from the lively 1980s into nothing exciting economically."

Sindlinger & Co., which asks nearly 800 households a week questions about their incomes, has found a rising level of frustration in the answers.

Nine of 10 people surveyed said their incomes were being squeezed because insurance premiums, taxes and other fixed costs had risen faster than wages or the opportunity to work more hours.

"This is not a recession peopled by the unemployed," said Albert Sindlinger, owner of the firm, noting that the nation's civilian unemployment rate is 5.2 percent. "This is the employed becoming ever more squeezed."

Because the government does not calculate the gross national product state by state, some economists use job growth within a state to measure economic performance. If the number of jobs rises over a 12-month period, a state's economy has expanded by this criterion; if the job total shrinks, the state is in recession.

By the measure of job growth, Michigan and five New England states - Maine, Massachusetts, New Hampshire, Rhode Island and Vermont - are clearly in recession.

Michigan is suffering because the auto industry has been in a slump.

New England has been hurt by the collapse of the construction industry and by stagnation in three other former engines of growth: military contracting, computer manufacturing and financial services.

Connecticut, Maryland, New Jersey, New York and Pennsylvania are not doing much better than the New England states, suffering some of the same problems.

Jobs in these states and five others - Alabama, Illinois, Louisiana, Missouri and Wyoming - are increasing at a rate of less than 1 percent a year, which Asklund of DRI/McGraw-Hill describes as "teetering on recession."

For the nation as a whole, job growth over the past year has been 1.8 percent.

The differences among state economies are not simply regional: Sometimes strong states are neighbors of weak ones.

For example, Nevada is a boom state, largely because of a burst of construction in Las Vegas. But next door in California, economic growth has begun to slow, with cutbacks in military spending forcing layoffs among aerospace companies and the construction industry losing steam.

by CNB