Double-dip

One of the comments on my first post about the ELCA layoffs challenged my assertion that we are in the worst recession since the Great Depression. Regardless of the ranking (which I still think is accurate), the current downturn is obviously severe. Yet whatever its depth, what may be an even bigger problem is this recession’s length.

One of the few economists to call the housing collapse and subsequent credit crisis, Nouriel Roubini, wrote Sunday that “the worst is yet to come.” He reiterated the prediction of Princeton economist and New York Times economist, Paul Krugman, that we are in for a “jobless recovery.” The concern that they and others have is that, while the economic free-fall has been stopped, there is no obvious source for a recovery.

New construction, both residential and commercial, will be very slow in coming back. Consumer spending will remain weak with high unemployment and as people continue paying down debt and rebuild their savings. And the Federal stimulus spigot can’t remain open indefinitely. Many are predicting a “double-dip” recession, with another period of economic decline coming (including a drop in the stock market). There are still many banks and other businesses in very precarious condition. Some big dominoes could still topple. Double digit unemployment is likely to remain into 2011 (or even longer).

None of this, of course, bodes well for the many churches already under financial stress. National church bodies will almost certainly see their revenue continue to decline as congregations try to cover their own budget shortfalls. For the ELCA, I continue to believe that negative reaction to the August assembly is only a small part of its financial problems. While there may have been some improvement in income the past few years, I think that was largely due to our national false prosperity which has now deflated so dramatically. Membership decline has been reliably steady for thirty years so any financial improvement was sure to be temporary, if not illusory. It’s hard to see how further budget, program and staff cuts will be avoided.