With 15 million people in this country out of work, and 9 million people underemployed, it may take years to recoup the lost jobs. And for those out of work, state unemployment benefits are running out or are close to running out because the lack of jobs means a lack of taxes collected to support the benefits, not to mention other programs.

To make matters worse, while the economy is said to be out of the recession, it still feels like the ending stages of a recessionary period. And, a major structural change is taking place, where consumers are spending less and putting more funds into their savings, says Ken Goldstein, economist, The Conference Board, which doesn't bode well when two-thirds of the economy is based on consumption. What's more, the federal stimulus funds are set to wind down.

What does it all mean to businesses as they make investment decisions about where to do business? Goldstein speaks about the state of the economy, and the Midwest region in particular, as of late April.

To learn the most up-to-date data on the economy view The Conference Board's latest Index of Coincident Economic Indicators, at www.conference-board.org.

Global Corporate Xpansion: Highlight the findings of the Consumer Confidence Index released near the end of April.

Ken Goldstein: There were no surprises. We need to go back to last autumn when at that point consumers felt like we were going to come out of recession and they were anticipating some improvement in the labor market.

That perception and expectation began to waiver this winter. We finally had some job growth in March. And consumers are looking to some increase in jobs, modest though they might be, which will lead to an increase in consumer income growth — but back up to where we were last autumn.

At this point, we are still at levels normally associated with the late stages of a recession than an economy six months into an expansion.

GCX: Why does this continue to happen?

Goldstein: The big factor is how deep a hole we fell into with this recession, especially with respect to jobs. When we look at what happened to job losses in this recession compared to the recessions of the mid 1970s and early 1980s, we went much further down in terms of how many jobs were lost this time around.

Nationally, we have 15 million people out of work; we have 9 million people who are working a part-time job with full-time bills; and we have another 1 million people who were looking for jobs and did not find them so they stopped looking.

The good news is that in March we actually gained 180,000 jobs. This figure does not include the temporary U.S. Census workers. Even with an average of 180,000 job additions a month, or even 200,000 jobs, if we got that consistently, with that many people out of work and looking for a job, we are talking about half a decade before we reduce the elevated unemployment rate.

Consumers understand that what took a long time to lose is going to take a long time to recover. And the associated factor with this is the structural change unfolding. The average consumer having gone through this, looking at we could be facing, is essentially saying: “I need a bigger piggy bank.”

The structural change runs from a zero or less than zero percent savings rate to a 3 percent to 5 percent savings rate. And the arithmetic here is that the money being saved is money not being spent. And when two-thirds of the economy is based on consumption that is one reason it will take a long time for the economy and the labor market to recover.

GCX: Speaking of piggy banks, what is the status of stimulus funds the federal government released and what do businesses need to understand about the funds?

Goldstein: A lot of the stimulus money is going to cut out or wind down starting this summer. Another factor is we got to where we are today in part because we spent so much money on all of those different programs, most of which are slowing down or coming to an end.

One point I would like to make is in regard to state-level unemployment funding. Because funding is running low and because states cannot run deficits, states will be forced to either raise their employer tax for their employees for FICA, and/or cut the benefits. In some places the benefits have been extended from 26 weeks to 39 weeks, and in some places, you can collect unemployment for 99 weeks.

The problem is that in addition to the funds running out of money we have some folks who have gotten their 99th unemployment check and there are still no jobs.

I do think the country needs to focus not on how bad the fiscal position is in Washington, D.C., but rather how bad it is in the state houses and city halls and what burden that might impose because the states and cities are prohibited by law from running deficits.

The money is simply not there because the jobs are not there. The money is not being made; therefore, the taxes are not being collected on that money. And at the same time there is a call on services, not just unemployment, which is really exacerbating the fiscal health of states and localities, which are cutting services and adding taxes in order to cover deficits.

Clearly that is a job killer. It doesn't matter what side of the aisle you sit on. It is crystal clear.

GCX: How does this situation tie into the federal health care reform package and the proposed financial reforms?

Goldstein: Many of those provisions don't kick in until 2014 precisely because we do not want to impose a burden when the economy is so weak.

One provision is that if you change jobs you can carry your health care plan with you.

That is of benefit to business in the sense that if all they are doing is picking someone up who is already on a plan; it doesn't necessarily increase their costs.

What it does do is because employees are not locked into a job, especially a job they don't like but are afraid to leave because they would lose health care benefits, companies could wind up with happier and therefore more productive workers.

But all of this is not an immediate impact. And it also depends on the other provision, which will kick in sooner, where people can get coverage paying rates much lower than COBRA rates. When a business takes someone on they are not necessarily incurring added expenses because someone is going from no coverage to coverage.

GCX: Ken, let's discuss the state of the Midwest's economy.

Goldstein. The Midwest was the weakest economic region of the country before the recession. What we are looking at now for the Midwest is a slow recovery, certainly in terms of jobs and goods production, which is more important to the Midwest than it is to other parts of country.

When we look at core services, excluding education and health, we are still looking at jobs that are 1 percent lower today than a year ago, and which are probably not going to recover faster than perhaps a 1 percent rate of growth in service jobs over the next year to two years.

GCX: Where are the strengths and weaknesses found in this region?

Goldstein: One of the things we have discussed in these columns before is not just the differences in variations in the country's various regions, but the variations within regions.

Northern Illinois is the strongest part of the Midwest. In some sense, Chicago has turned itself into a service center, which has helped to cushion the city and the state from some of the ravages that other Midwest cities have faced; not that they escaped the downturn.

There is no question Michigan is the weakest. Indiana is in between the two. And in Ohio, northern Ohio is not in quite as good of shape as southern Ohio.

Looking to the longer term, clearly not in 2010 or 2011, green energy and all of those windmills in the upper plains states will make a difference. As will some of the services in information, communications and technology area, which is what kept Chicago from facing the fate of Detroit. This [energy and ICT] may well be where the future lies for Detroit, especially with respect to energy.

But the road from here to there, and those folks know better than I, will be very long and difficult.

Interview conducted by Rachel Duran.

Ken Goldstein is an economist with The Conference Board, and can be reached by e-mailing ken.goldstein@conference-board.org. For more than 90 years, The Conference Board has created and disseminated knowledge about management and the marketplace to help business strengthen their performance and better serve society. The organization operates as a global independent membership organization working in the public interest. Among its services, the organization publishes information and analysis, makes economics-based forecasts and assesses trends. To learn more, visit www.conference-board.org.