The economy has been emerging from recession for a while, but people are in the midst of a radical reassessment of their previous assumptions about every aspect of their financial lives.
Economists used to liken recessions to trampolines. Now, it's as if someone removed the springs.
"Back in the '80s, the conventional wisdom held that the steeper the recession, the faster the recovery -- but now instead of a big bounce back, we sort of have this long slump," said Timothy Taylor, a Stanford-trained lecturer, textbook author and managing editor of the St. Paul-based Journal of Economic Perspectives.
What's certain is that the economy has been emerging from recession for a while. What's also emerging is that people are in the midst of a radical reassessment of their previous assumptions about every aspect of their financial lives. Attitudes toward job searches, retirement planning, debt levels, how much to pay for a house and whether it makes sense to expand a business are undergoing a simultaneous overhaul that has economists scratching their heads.
"Movement is hard on people," Taylor said. "We'd all like to just move when we choose, not when the world makes us choose."
Many Minnesotans aren't waiting for the economy to find its own level before making their own adjustments.HIRING HIMSELF
Rich Krannich can remember attending a job networking session where he listened in disbelief as speaker after speaker described what it was like being jobless for a year or longer.
"I remember thinking, 'Wow, there is no way that would ever happen to me,' " said Krannich. "No possible way."
Sixteen months later, the impossible has happened.
Krannich, 37, a telecom coordinator with 10 years of experience, is still out of a job. The Faribault resident and recently divorced father of two young children is one of an estimated 4.2 million people nationwide who've been out of work for 52 weeks or more. They make up a third of the nation's unemployed, the highest percentage on record.
Krannich was laid off in late 2009 from a $42,000-a-year job as a project manager at Comm-Works, a telecom equipment company in Plymouth.
Suddenly he could no longer afford to take his children, Trey, 10, and Megan, 5, on outings to the Mall of America's Nickelodeon Universe, or on weekend trips to Duluth. His health insurance ran out, so Krannich, a diabetic, stopped taking medication. His blood sugar levels skyrocketed.
He did everything that career job counselors recommend. He worked on his interviewing skills, attended weekly networking events, did volunteer work to build more contacts. Nothing worked.
So instead, Krannich started a home-based business. He now spends about 20 hours a week selling fitness plans and nutritional supplements. He's trying to see if he can make enough money "flying solo," as he calls it, to do without a traditional, full-time job. Time, however, is running short. His unemployment benefits expire in April.
"Someone once said that life is 10 percent what happens to you and 90 percent how you react to it," he said. "I'm not going to let events get the better of me."
HAPPY, MOSTLY, AT HOME
Tonya Beck loves her neighborhood, loves her house, loves the addition she and her husband built after they bought it in 2005.
Good thing, too, because it's turned into a bad investment so far. The city of Edina says the house is worth $75,000 to $100,000 less than what the Becks have put into it.
"It's like looking at your 401(k)," she said. "You just can't look at it every day and worry about it."
Nonetheless, Beck knows that she bought at the peak and that moving might not be an option for a very long time. Before this house, she and her husband, an independent sales rep, built a house in Chaska and owned it only for a couple of years before cashing in. They didn't make as much as some of their neighbors, some of whom sold their houses for $200,000 more than they paid, but it was enough to provide a healthy down payment on the mid-century rambler that they expanded into a modern Craftsman-style two-story. The euphoria of living in a "perfect" house has been tempered by watching its value fall, and by worry about her husband's salary. "He's definitely had some hills and valleys," she said.
Beck, a 37-year-old stay-at-home mother of three, is well aware that more than a third of all homeowners with a mortgage are underwater and that the housing market has yet to hit bottom.
"We hope to be here long enough to pay off the mortgage," she said.
For now, there are no more impulse purchases.
"I even think, 'Do I need to spend on a Caribou? Or can I live without it?' "
The answer is usually "yes," she said.BACK FROM THE BRINK
Valerie McKissack spent the last three years downsizing her company. She let go four of her six employees and had to stop offering health insurance.
But that will change, insists McKissack, the 54-year-old president of Allied Electrical and Industrial Supply Co., the company she founded in 1993.
"I am hoping that around the second or third quarter we should see a little pickup in the economy," she said. "It's been really, really bad."
Her company supplies everything from plumbing pipes to automated streetlights and electrical machines for construction and corporate projects. Many contracts expired during the recession and customers curtailed future orders. McKissack scrambled to secure new ones and became adept at "following the money."
"You have to be able to persevere and to swing with the economy," she said.
She has reason to be optimistic.
Last month, she bought furnaces for 140 homes for the Minneapolis Public Housing Authority. In the fall, she won a contract to supply underground pipe fittings and valves for a ramp project in Minneapolis. In the spring, Allied won the contract to supply streetlights to Hennepin County.
The contracts, which totaled $400,000, had just enough of a margin for her to retain one salesman and one assistant. "I hope to add two or three employees" in the next year, McKissack said. "There are a lot of good people who are out of work right now. ... They can help grow my company. But I want to be able to pay them what they are really worth."
If business keeps improving, she hopes to offer health insurance again next year.
MILLIONAIRE NEXT DOOR
Tom Erickson figured he'd be the proverbial millionaire next door, if he did his research, bought stock in good companies, held his picks for decades.
But the investment strategy that Erickson, a 64-year-old from Red Wing, thought would "take him to the moon" fell short. His portfolio lost more than half of its value, then recovered some but is still far from its all-time high.
"My long-term planning really didn't work out,'' he said. "The ideas I had then didn't really come true."
Like many Americans, Erickson's wages also peaked years ago. Today he's making half what he did in the late '80s, when he worked for a Canadian company installing pipe organs across the Midwest.
When he and his employer parted ways five years ago, Erickson started selling real estate to bolster his earnings. Then came the housing bust and he decided to let his license lapse. His wife, Emily, works two part-time jobs.
Like many near-retirees, they are still adjusting to a more modest vision for their future. Gone is their dream of frequent travel and long stretches spent at the family cottage in Nova Scotia. Growing old in the family home near downtown Red Wing, where his grandkids love to come and play in the woods, may also need to change.
Selling the house to boost their retirement nest egg has crossed Erickson's mind.
He tries to stay positive.
"I know some of the indicators say things are looking up. But I have a gut feeling that is not good and it's from these last five years or so. I think it's a feeling that the rest of my life is going to be financial rollercoaster."BACK WITH THE 'RENTS
Burger King wasn't part of Adam Ulbricht's vision of life after college.
Ulbricht, who graduated with honors from St. Cloud State University's mass communications program last May, realized it would be tough to find a job in the radio industry. So he decided on graduate school.
"You think [by] going to college, you're going to get a job right away, doing what you want to do. That's not a very realistic reality right now," he said.
His graduate school investment didn't come cheap. Besides, the $7,000 tuition, Ulbricht left the college dorm to move back into his old room at his parents' home in Melrose. A radio internship didn't pay enough to cover expenses, so the 23-year-old continued working part-time as a manager at his hometown's Burger King, the same place he's worked since high school, where he earns $8.60 an hour.
Since going for his master's, Ulbricht believes his employment prospects have improved. He's applied for internships at Washington, D.C., political think tanks and is broadening his media skills by studying mass communications with an emphasis in public relations in grad school. Next year, Ulbricht hopes to move into an apartment.
"Another year and half should buy me a little bit more time to gauge the market and network a little better," he said.FORWARD, BUT NOT TOGETHER
"Dad, you'll make more money if I leave."
With those parting words, Matthew Johnson, 23, left his father's drywall company last month, ending a father-son dream of building a business together.
Rodney Johnson, 46, of Shakopee, tried to talk his son out of it. But they both knew the grim facts. With so few houses being built, and gas costs way up, they were barely making enough money to support one worker -- much less two.
"It was a lot harder on me than him," Rodney Johnson said.
Before the housing market collapsed, Johnson had 20 people working for him. He had enough jobs lined up to last him six months. Then, in early 2008, building activity screeched to a halt. Johnson went a month without a single job. "There were days when I said to my wife, 'What's the point of getting out bed when there's no work?' " he said.
Yet, Johnson still held out hope that he could keep just one employee -- his son. It had always been his dream, from when Matthew could barely walk, that he would teach his son the drywall trade. Now, he's glad his son is going back to school.
"It's hard, because I really liked having him around," Johnson said of his son. "But there's just no future. It took 25 years to get wages in this business built up to where they were, and just two years to beat them back down to where they were in the 1980s."
These days Johnson scouts construction sites in his red van, leaving his business cards with job supervisors. He calls other contractors relentlessly in an effort to drum up more work. Jobs he used to turn down because they were too small or too far away he now gladly accepts.
He's got enough small drywall work to keep him busy through mid-March.
"Employers stay away from self-employed people like us because we're seen as too independent. It's our way or the highway," he said. "Everyone is looking for that degree."