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Amid Attention From Obama, GOP, How Is Midwest’s Economy Doing?

August 17, 2011 at 12:00 AM EST
On the last day of his bus tour through the Midwest, President Obama's aides said he will outline a national jobs plan after Labor Day. Jeffrey Brown discusses the state of the economy in Midwestern states with Iowa State University's David Swenson, Dee DePass of Minneapolis' Star Tribune and Micheline Maynard of Changing Gears.
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TRANSCRIPT

JEFFREY BROWN: President Obama was on the road again today, offering ideas for help in the rural economy, while continuing to counsel patience. He sent that message amid reports of a major speech on jobs and the national economy in September.

(CHEERING AND APPLAUSE)

JEFFREY BROWN: Day three of the president’s bus tour found him in his home state of Illinois, insisting again that things will get better.

PRESIDENT BARACK OBAMA: You know, I think, a lot of times, there have been folks who said — who wonder whether our best days are still ahead of us or are they behind us. But I will tell you, when I travel through downstate Illinois, when I traveled through Iowa, when I traveled through the Midwest, I am absolutely confident about this country.

JEFFREY BROWN: President Obama began the week in Minnesota, where unemployment was at 6.7 percent as of June. The state also endured a three-week-long government shutdown this summer.

From there, the presidential bus rolled on to Iowa, with six percent unemployment, low by national standards, but well above where it was in recent years. Illinois’ jobless rate stands above nine percent. It’s also facing severe budget woes and significant cuts.

Speaking at a town hall in Atkinson this afternoon, the president acknowledged that a vital component to any turnaround, the housing market, is at least a year away from coming back.

BARACK OBAMA: The federal government is not going to be able to do this all by itself. And it will probably take this year and next year for us to see a slow appreciation again in the housing market.

JEFFREY BROWN: On his bus trip this week, the president outlined several relatively small initiatives to spur job growth in rural areas.

But, today, his aides said he will lay out a major new national jobs plan in a speech after Labor Day, one that will include tax breaks, help for the long-term unemployed and spending on construction projects. And the president will call for more than $1.5 trillion in deficit reduction.

BARACK OBAMA: I don’t think it’s good enough for us to just do it part way. If we’re going to do it, let’s go ahead and fix it.

JEFFREY BROWN: In their own campaign travels in Iowa in recent days, Republican presidential hopefuls have been hammering away at the jobs issue.

CHILD: How many jobs are you going to create?

GOV. RICK PERRY, R-Texas presidential candidate: As many as I can. OK?

(LAUGHTER)

REP. MICHELE BACHMANN, R-Minn. presidential candidate: Grow the economy, grow jobs, and we will restore the promise of the future to the next generation. It will happen.

(CHEERING AND APPLAUSE)

JEFFREY BROWN: The jobs theme seems certain to echo with increasing urgency in the months ahead.

And we take a closer look at the economies in the region the president visited with Dee DePass, a business and economics writer for the Minneapolis Star Tribune. David Swenson teaches in the economics department at Iowa State University. And Micheline Maynard is senior editor of Changing Gears, a public radio project on the future of the industrial Midwest.

Well, Micki Maynard, this bus trip was mostly aimed at rural areas. Give us a snapshot of the economic situation in Illinois, where the president was today.

MICHELINE MAYNARD, Changing Gears: Well, the economic situation in Illinois isn’t the worst in the Great Lakes, but it’s close to the worst in the Great Lakes.

Unemployment is over nine percent. When the year started, the state had a $13 billion budget deficit, its pensions were under threat and the first thing that happened here was that income taxes were raised. I think what you see is issues in Chicago of unemployment in particular, some crime this summer.

We have a new mayor, Rahm Emanuel, who has basically said, look, I’m going to have to cut things. And he actually got the unions to come to the able and present their own suggestions. In the rest of the state, it’s a little better. Places like Decatur, Ill., which we featured in a report, have seen some hiring going on. It’s not as bad in the rural areas of Illinois, but the big cities are suffering.

JEFFREY BROWN: Now, David Swenson, you have certainly had politicians galore in the state of Iowa recently. I mentioned that the unemployment is six percent, which feels a little low to many, but how does it feel there?

DAVID SWENSON, Iowa State University: Well, a six percent unemployment rate is much higher than Iowans are comfortable with.

We went into the recession a little later than the nation, but we rose at about the same pace or at the same slope thereafter, and we have maintained a high — relatively high — unemployment rate since that time.

The — the higher-than-average unemployment rate is worse, though, out in some of our medium-sized cities. Those cities depend on manufacturing jobs. We know that manufacturing has taken an extra special hit. Manufacturing is a big component of the Iowa economy. Those economies are the economies that are hurting a little bit worse than the state average. They were in the recession sooner. They’re probably going to come out of the recession later.

And they’re the types of economies and the types of communities that are going to be very attentive to any type of new job initiative.

JEFFREY BROWN: And, Dee DePass, of course, nationally, there has been a sense that — there was a sense that things were getting better, and then unemployment started creeping up again and growth slowing. Is that — is that what’s happening in Minnesota?

DEE DEPASS, Minneapolis Star Tribune: That’s the same exact picture that you’re seeing in Minnesota.

We had come back from an 8.5 percent unemployment rate in April of 2009, and had gotten all the way down to a 6.5 percent unemployment rate in April. And from there, it started ticking up again. It certainly didn’t help that we ended up having a three-week state shutdown, state government shutdown, that displaced 22,000 state workers, plus another 3,000 state contract employees.

And so you have a big hit that’s about to come out tomorrow. We’re expected to get the unemployment rate for July for the state, and it’s expected to go up as far as — possibly as much as a full percentage point. So, Minnesotans are hurting — hurting quite a bit.

JEFFREY BROWN: And what — and, Dee DePass, what kind of industries are most affected here?

DEE DEPASS: Well, our housing industry was dramatically impacted. It sort of started, obviously, the recession in this state.

We have got large window manufacturing here in Minnesota. Andersen Windows is based here. Marvin Windows is based here. We have something called OSB strand board manufacturers here. They’re the ones that do the — it’s like a created plywood. And there are a number of factories here. So we had layoffs basically in a lot of manufacturing companies that cater to the housing — housing sector.

And that — that really hurt Minnesota, I would say, quite a bit.

We’re starting to see some stabilization in that, but it certainly did some damage early on.

JEFFREY BROWN: Now, Micki Maynard, you look throughout the region. Broaden it out a little bit at other states. But also talk about some of the industries that you’re watching most carefully and most concerned about.

MICHELINE MAYNARD: Right. Well, Michigan is slipping again. I heard Dee say that Minnesota’s numbers are coming tomorrow. Michigan’s numbers came out today, and they have risen back to 10.9 percent. So they’re headed to 11 percent again.

They were up over 12 percent at the depth of the recession. And, you know, people say that manufacturing is coming back, and it is coming back to a certain extent. But there are still jobs being lost. Ann Arbor, Mich., is the home of Borders books. And Borders books is now going to liquidate, and that will be several hundred headquarters jobs right in Ann Arbor, and those are the kinds of jobs that nobody really worried about.

Ohio is a little bit better off. Their unemployment rate, I think, is about 8.8 percent. And there, too, they have been reliant on manufacturing. And you’re seeing them shift over to more services like health care. You’re seeing these states look at energy as far as green energy jobs go.

But, you know, you need a bulk of jobs to come back to replace the jobs that were lost. There was something like 500,000 jobs lost in Michigan alone during this recession and there really aren’t the magic bullets that are going to create those thousands of jobs that can come back so those people can go back to work.

JEFFREY BROWN: Well, David Swenson, how much — given that, how much can you tell about public attitudes, about consumer confidence, about willingness to buy things, willingness to buy homes, et cetera?

DAVID SWENSON: Well, statewide and nationwide, we already know that consumer confidence is down. The willingness of households to open up their pocketbooks and to take risks is much — is lower.

People are saving more. And all of those are working against a recovery. A state like Iowa depends heavily on the rest of the country buying Iowa-based goods and services. We’re a major financial center as well. And if the rest of the country isn’t recovering, we’re not going to recover.

We have some strengths in our economy because the ag economy is relatively strong. We have high prices for grain right now. Those types of things are helpful, but that’s not enough to carry the rest of the economy. We need the rest of the nation to begin recovering, so that we can catch on to that recovery and begin recovering more ourselves.

JEFFREY BROWN: And are there — Dee DePass, are there — I mean, we talked about the president coming through with some relatively smaller initiatives in the last few days aimed at rural — rural economies. But I wonder, do those jibe with the kinds of ideas that you’re hearing in your state in terms of what government can do either at the federal or state level?

DEE DEPASS: I think what you’re seeing here is something similar to what David talked about in Iowa. You are seeing rural areas do better than our urban areas.

As — can you talk a little bit more about — just ask your question in a little bit of a different way, Jeff, if that’s OK, and I want to be able to answer you.

JEFFREY BROWN: Oh, no, I was just wondering what kind of — is there much discussion about what government can do there to help the economy?

DEE DEPASS: Right now, the government input is a little bit difficult.

We have just come off of the state shutdown. And a large — we have a $5 billion budget deficit. And so the debate has been how can we balance the budget, not so much how can our state government help you. One of the setbacks has been that there are going to be layoffs of local and state government workers simply because of this budget crisis.

So, as far as the state government putting forth a message as to how it can help consumers feel more confident about what’s going on in the economy, those discussions right now are not really taking place.

JEFFREY BROWN: And…

DEE DEPASS: It’s just too fresh right off of the — the crisis that we just came off of with the budget crisis.

JEFFREY BROWN: And, Micki Maynard, briefly, I mean, that kind of state government crunch is felt in a number of states where — that — that you keep an eye on, right?

MICHELINE MAYNARD: It is.

And we know about all the turmoil politically in Wisconsin. And their unemployment rate is actually pretty good. I mean, none of it’s good, but they’re seven percent, 7.5 percent in Wisconsin.

But, you know, to your point about what people are asking to be done, one of the big things that happened in Michigan back during the Depression was the CCC, the Civilian Conservation Corps. And if you look at northern Michigan, a lot of what’s up there was built by the CCC. And you’re starting to hear people say, let’s get a government program, even if it pays people less than the prevailing wage, but let’s get some jobs created and put some people back to work.

JEFFREY BROWN: All right.

Micki Maynard, David Swenson, Dee DePass, thank you all very much.

MICHELINE MAYNARD: Pleasure.

DEE DEPASS: Thank you.