By Marilyn Odendahl, Truth Staff

INDIANAPOLIS -- December unemployment figures, released by the state Tuesday, cap a year of climbing layoffs and plant shutdowns while giving some economists more reason to doubt any kind of economic recovery will come in 2009.

Elkhart County remains at the top of Indiana unemployment rolls with 15.3 percent of its workforce -- 15,983 workers -- without jobs in December, according to the Indiana Department of Workforce Development. That is a significant rise from the November rate of 12.4 percent and more than triple the 4.7 percent unemployment rate recorded in December 2007.

Meanwhile, the state rate jumped to 8.1 percent in December from 6.9 percent in November. Nationally, unemployment reached 7.1 percent in the final month of 2008, up from 6.5 percent in November. Just one year ago, Indiana was better than the country as a whole with an unemployment rate of 4.5 percent compared with the U.S. average of 4.8 percent.

The current recession is unlike any in recent memory, say Jerrell Ross Richer, associate professor of economics at Goshen College, and Bill Witte, associate professor emeritus of economics at Indiana University in Bloomington. The two draw comparisons to the recessions of the mid-1970s and the early 1980s but they point out that during those times, unlike today, the financial markets were still relatively sound.

Now the Federal Reserve has dropped federal funds' rate to an unprecedented zero and still the economy is not reviving.

"We're certainly in a downturn that's at least comparable to the ones in the early '80s and mid-'70s," Witte said. "The way things are going, this one could turn out to be worse than either one of those."

For the year, Elkhart County's unemployment rate averaged 8.3 percent. That is lower than the opening years of the 1980s, when the rate hovered around 10 percent and reached a high of 13.2 percent in 1982.

However, average yearly jobless totals have been getting lower, Witte explained, which could make the current 8.3 percent feel as bad as the 13.2 percent did.

The cities of Elkhart and Goshen continue to lead Hoosier municipalities in unemployment. The top five Indiana cities with the highest jobless rate are:

* Elkhart at 17.0 percent

* Goshen at 15.4 percent

* East Chicago at 12.8 percent

* Marion at 11.3 percent

* Kokomo at 11.2 percent

Local cities and the county are being hit especially hard because of the manufacturing base, Richer said. As the economy slows, corporations find it easier to reduce costs and still operate by cutting their purchases of manufactured goods rather than skimping on business necessities such as accounting.

"I don't think there's anything wrong with manufacturing," he said. "I'm delighted to live in a place that makes things."

Still, businesses and industries in Elkhart County must diversify what they manufacture and look to building products that consumers want. Richer espoused the possibility of local companies making components and parts for the budding green energy industry.

Expanding the product offerings coming from Elkhart County could get the plants and the workers busy again but the recovery, here and across the country, will be slow in coming.

To Witte, the unemployment figures show the downturn is beginning to feed on itself. Businesses, he believes, are now so worried that they are cutting costs and laying off workers pre-emptively. This, in turn, gives consumers less money to spend, which lowers consumption and, thus, dampens the economy even more.

When the bounce of recovery arrives, Witte does not expect it to be as buoyant as past economic recuperations.

Before the recession started, many households in the U.S. were overspending and relying on credit and the rising value of their homes to finance their lifestyles. This downturn will reverse that trend, Witte said, but also weigh down the recovery.

Once the economy starts its upswing and incomes get better, he said, households will most likely first put money into savings, then boost their retirement accounts before they spend their dollars on big-ticket items such as cars.

"A lot of people have to drag themselves out of a big hole first," Witte said.

Upon returning to their offices, cubicles and work stations, workers probably will encounter residual effects of this recession. Witte foresees lower wages and cuts in health-care benefits.

Smaller paychecks actually will help fix the economy, Richer said. Not only do lower wages make companies more willing to hire workers but also bring lower prices as the free market adjusts. Eventually, the wages will start going back up.

Although a recovery will come, the economy and unemployment rates are predicted to get worse before they get better.

"It really is uncharted territory," Richer said. "We really don't know what's going to happen. I do not believe the economy will recover in 2009."

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