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Economic Snapshot: April 2013

Economic Snapshot: April 2013

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The U.S. economy needs more policy attention in order to reach a self-sustaining recovery.
The U.S. economy needs more policy attention in order to reach a self-sustaining recovery.

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Published by: Center for American Progress on Apr 20, 2013
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1Center or American Progress | Economic Snapshot or April 2013
Economic Snapshot for April 2013
Christian E. Weller on the State of the Economy
Christian E. Weller, associate professor, Department of Public Policy and Public Affairs, Universityof Massachusetts Boston, and Senior Fellow, Center for American Progress, and Sam UngarApril 2013
Doubs remain abou he srengh o he economic recovery even in he ourh yearo he economic expansion ha ocially sared in June 2009. Mos imporanly, job growh slowed again in March 2013 aer gaining some srengh in he preced-ing monhs. Te economic recovery should be sel-susaining a his poin, bu large,persisen problems such as massive household-deb burdens, high U.S. income inequal-iy, and public scal problems boh in he Unied Saes and overseas are holding back economic and job growh. As a resul, he U.S. economy will require coninued policy atenion o generae hemuch-vauned sel-susaining momenum. Inrasrucure invesmens, or example, would help creae more privae-secor jobs in he shor run and lay he oundaion oraser growh in he long erm by lowering he cos o doing business, hereby making America more compeiive globally. A higher minimum wage, in addiion, would be ars sep in atacking he massive income inequaliy in he Unied Saes, as i would easehe nancial sruggles o hose households wih he lowes incomes. And policymakerscan do more o help households wih ousanding morgages renance heir deb inolower-ineres morgages o ease he sill relaively large deb burden. Te modes recov-ery will sill require addiional policy inervenions o accelerae economic growh and,even more imporanly, job creaion.
1.
Economic growth slowed markedly at the end of 2012.
Gross domesic produc,or GDP, was essenially a in he ourh quarer o 2012, increasing slighly a anannual rae o 0.4 percen. Domesic consumpion increased by an inaion-adjusedannual rae o 1.8 percen; housing spending grew by 17.6 percen; and businessinvesmen acceleraed by 13.2 percen. In he ourh quarer o 2012, however,expors ell by 2.8 percen, and governmen spending shrank by 7 percen.
1
Policy soluions should hereore aim o ease he srain o scal auseriy on he economy  by dampening spending cus, and hey should boos domesic privae-secor eco-nomic aciviy o ofse he all-of in overseas demand.
 
2Center or American Progress | Economic Snapshot or April 2013
FIGURE 1
March 2013 unemployment rate by race
Source: Bureau of Labor Statistics,
Current Population Survey 
 (U.S. Department of Labor, 2013).
2.
The moderate labor-market recovery continues in its fourth year.
 
Tere were4.6 million more jobs in March 2013 han in June 2009 when he economic recov-ery ocially sared. Te privae secor added 5.3 million jobs during his period.Te loss o nearly 687,000 sae and local governmen jobs explains he diference beween he ne gain and he privae-secor gain in his period, as budge cusreduced he number o eachers, bus drivers, reghers, and police ocers, amongohers.
2
Job creaion should be a op policy prioriy since privae-secor job growhis sill oo weak o quickly overcome oher job losses and rapidly lower he unem-ploymen rae. Once again, removing he uncerainy abou scal changes is a key sep oward srenghening economic and job growh.
3.
Long-term unemployment remains high.
Te unemploymenrae sood a 7.6 percen in March 2013. Long-erm unemploy-men—dened as people who are ou o work and have beenlooking or a job or more han six monhs—also remained high.In March 2013, 39.6 percen o he unemployed were consideredlong-erm unemployed. Te average lengh o unemploymenalso grew slighly in March 2013, rising o 37.1 weeks.
3
Tose ouo a job or a long ime sruggle o regain employmen becauseheir skills arophy and enry ino a new job becomes increasingly harder. Te coninuaion o exended unemploymen insur-ance benes as par o he resoluion o he scal showdown on January 1, 2013, was hus a welcome policy ha helped many o hose mos vulnerable o economic shocks.
4.
Labor-market troubles fall especially hard on communities of color, young workers, and Americans with less education.
Te Arican American unemploymen rae in March 2013 was 13.3percen; he Hispanic unemploymen rae was 9.2 percen; and he whie unemploymen rae was 6.7 percen. Te populaion groups wih higher unemploymen raes—hose ha ypically also have low incomes andlitle wealh—have sruggled disproporionaely more amid he weak labor markehan whie workers, older workers, and workers wih more educaion. Tis creaes agreaer need or progressive policy acions o srenghen job creaion or everybody.Meanwhile, youh unemploymen sood a 24.2 percen. Te unemploymen rae orpeople wihou a high school diploma icked down slighly o 11.1 percen—com-pared o 7.6 percen or hose wih a high school degree, 6.4 percen or hose wihsome college educaion, and 3.8 percen or hose wih a college degree.
4
 
5.
Household incomes continue to drop amid prolonged weaknesses in the labormarket.
 
Median inaion-adjused household income sood a $50,054 in 2011—he mos recen year or which daa are available—is lowes level in inaion-adjused dollars since 1995. Median income ell by 1.5 percen in 2011, dropping or
0%3%6%9%12%15%White Hispanic African American6.79.213.3
 
3Center or American Progress | Economic Snapshot or April 2013
he ourh year in a row. American amilies as a whole have experienced no incomegains during he curren economic recovery since 2009, exacerbaing he losses haoccurred during he Grea Recession.
5
 
6.
Income inequality on the rise.
Incomes o households in he 95h percenile—wihincomes o $186,000 in 2011—were more han nine imes he incomes o house-holds in he 20h percenile, whose incomes were $20,262. Tis is he larges gap beween he op 5 percen and he botom 20 percen o households since he U.S.Census Bureau sared keeping record in 1967.
6
7.
Poverty stays high.
Te povery rae ell o15 percen in 2011, down rom 15.1 percenin 2010. Te Arican American povery rae was 27.6 percen; he Hispanic povery rae was 25.3 percen; and he whie rae was 9.8percen. Te povery rae or children underhe age o 18 sood a 21.9 percen. More hanone-hird o Arican American children—38.8percen—lived in povery in 2011, comparedo 34.1 percen o Hispanic children, and 12.5percen o whie children.
7
Te prolongedeconomic slump, ollowing an excepionally  weak labor marke beore he crisis, has aken amassive oll on he mos vulnerable ciizens.
8.
Employer-sponsored benefits are disappear-ing.
 
Te share o people wih employer-sponsored healh insurance dropped rom59.8 percen in 2007 o 55.1 percen in 2011, he mos recen year or which daaare available.
8
Te share o privae-secor workers who paricipaed in a reiremenplan a work ell o 39.2 percen in 2011, down rom 42 percen in 2007.
9
Familiesnow have less economic securiy han in he pas due o ewer employmen-based benes, which requires more privae savings o make up he diference.
9.
Family wealth losses still linger.
 
In December 2012 oal amily wealh was down$8.4 rillion—in 2012 dollars—rom is las peak in March 2007. Homeownerson average own only 46.6 percen o heir homes—compared o he long-ermaverage o 61 percen beore he Grea Recession—wih he res owed o banks.
10
 Homeowners’ massive deb slows household spending growh, as householdssill do no have a lo o collaeral or banks o loosen heir lending sandards, andhouseholds spend less han hey oherwise would on new homes and on oherlarge-icke iems.
10.
Household debt is still high.
Household deb equaled 105.5 percen o aer-ax 
FIGURE 2
Wealth to personal disposable income, 1952 to 2012
Source: Board of Governors, Federal Reserve System, “Release Z.1 Flow of Funds Accounts of the United States”(2012).
Percent of after-tax income
0%200%400%600%800%March 1952March 1967March 1982March 1997March 2012

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