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Economic Snapshot: June 2013

Economic Snapshot: June 2013

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Despite gains in the housing market, economic growth and labor-market growth remain too slow to make a difference for the American middle class.
Despite gains in the housing market, economic growth and labor-market growth remain too slow to make a difference for the American middle class.

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Published by: Center for American Progress on Jun 21, 2013
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1Center or American Progress | Economic Snapshot: May 2013
Economic Snapshot: June 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 UngarJune 2013
Te economic recovery is nohing i no resilien. Te economy and he labor markein June coninued on heir pah oward a sel-susaining recovery, despie he onse o adverse policy changes such as he end o a emporary payroll ax holiday in January 2013 and across-he-board spending cus in April 2013. Economic growh and jobcreaion would likely have been sronger under a dieren se o policies, bu housing-marke growh provided he economy a much-needed boos.Despie housing gains, America’s middle class desperaely needs sronger growh andaser job creaion. Millions o amilies are sill suering rom high unemploymen, per-sisen long-erm unemploymen, and massive household-deb burdens.I is no oo lae or policymakers o reverse course away rom a sole ocus on decireducion and oward a combinaion o ax and spending changes ha will conribueo sronger economic growh and lower decis. Indeed, recen research by he Ceneror American Progress has shown ha he need or urgen deci reducion has signi-canly abaed over he pas hree years.
1
Wih his conex in mind, policymakers shouldheed he recommendaions in CAPs comprehensive agenda or economic progresso srenghen he American people and build he business environmen necessary orsusainable long-erm growh.
2
 1.
Economic growth picked up at the beginning of 2013.
Gross domesic produc, orGDP, increased in he rs quarer o 2013 a an inaion-adjused annual rae o 2.4percen. Domesic consumpion increased by an annual rae o 3.4 percen, hous-ing spending grew by 12.1 percen, business invesmen acceleraed moderaely by 2.2 percen, and expors grew only by 0.8 percen in he rs quarer. Governmenspending shrank again by 4.9 percen, slowing overall growh.
3
Policy soluionsshould hereore aim o ease he srain o scal auseriy on he economy and replaceacross-he-board spending cus wih a scal policy approach ha can acually enhance raher han slow economic growh.
 
2.
The moderate labor-market recovery continues in its fourth year.
Tere were 5.1million more jobs in May 2013 han in June 2009, when he economic recovery o-cially sared. Te privae secor added 5.8 million jobs during his period. Te losso nearly 670,000 sae and local governmen jobs explains he dierence beweenhe ne gain o all jobs and he privae-secor gain in his period. Budge cus reducedhe number o eachers, bus drivers, reghers, and police ocers, among ohers.
4
  Job creaion should be a op policy prioriy since privae-secor job growh is silloo weak o quickly overcome oher job losses and rapidly lower he unemploymenrae. A reorienaion o ax and spending policies o srenghen economic growhraher han a blind obsession wih decireducion a all coss could creae millions o  jobs ha America’s middle class desperaely needs.3.
Long-term unemployment stays high, andsome communities continue to struggledisproportionately from unemployment.
Te unemploymen rae sood a 7.6percen in May 2013, and 37.3 percen o he unemployed had been ou o work ora leas six monhs. Tose ou o a job or along ime sruggle o regain employmen because heir skills arophy. Tis is especially rue or economically vulnerable groups.Te Arican American unemploymen rae was 13.5 percen in May 2013, he Hispanicunemploymen rae was 9.1 percen, and he whie unemploymen rae was 6.7 percen.Meanwhile, youh unemploymen sood a 24.5 percen. Te unemploymen raeor people wihou a high school diploma icked down o 11.1 percen, comparedo 7.4 percen or hose wih a high school degree, 6.5 percen or hose wih somecollege educaion, and 3.8 percen or hose wih a college degree.
5
Tese popula-ion groups wih higher unemploymen raes 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 a greaer need or progressive policy acions osrenghen job creaion or everybody.
2Center or American Progress | Economic Snapshot: May 2013
FIGURE 1
Share of long-term unemployment, business-cycle averages
Source: U.S. Bureau o Labor Statistics,
Current Population Survey 
(U.S. Department o Labor, 2013).
0%5%10%15%20%25%30%35%40%
Dec ‘07Mar ‘01Aug ‘90Feb ‘80Dec ‘73Jan ‘70May ‘60Sep ‘57Aug ‘53Dec ‘48
    A   v   e   r   a   g   e    l   o   n   g  -    t   e   r   m    u   n   e   m   p    l   o   y   m   e   n    t   r   a    t   e
Business-cycle start date
 
3Center or American Progress | Economic Snapshot: May 2013
4.
The rich continue to pull away from most Americans.
Incomes o households in he95h percenile—hose wih incomes o $186,000 in 2011, he mos recen year or which daa are available—were more han nine imes he incomes o households 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. CensusBureau sared keeping record in 1967. Median inaion-adjused household incomesood a $50,054 in 2011, is lowes level in inaion-adjused dollars since 1995. And he povery rae remains high, a 15 percen in 2011, as he economic slumpconinues o ake a massive oll on he mos vulnerable ciizens.
6
 5.
Employer-sponsored ben-efits disappear.
Te shareo people wih employer-sponsored healh insurancedropped rom 59.8 percenin 2007 o 55.1 percen in2011, he mos recen yearor which daa are available.
7
 Te share o privae-secor workers who paricipaedin a reiremen plan a work ell o 39.2 percen in 2011,down rom 42 percen in2007.
8
Families now haveless economic securiy hanin he pas due o eweremploymen-based benes, which requires ha hey havemore privae savings o makeup he dierence.6.
Family wealth losses still linger.
In March 2013 oal amily wealh was down $8.4rillion (in 2013 dollars) rom March 2007, is previous peak. Homeowners on aver-age own only 49.2 percen o heir homes—compared o he long-erm average o 61percen beore he Grea Recession—wih he res owed o banks.
9
Homeowners’massive deb slows household-spending growh, as households sill have litle colla-eral or banks o loosen heir lending sandards and households spend less han hey oherwise would on new homes and oher big-icke iems.7.
Household debt is still high.
Household deb equaled 106.3 percen o afer-ax income in March 2013, down rom a peak o 126 percen in March 2007.
10
 Household deb grew again relaive o afer-ax income in he rs quarer o 2013,up rom a low o 104.8 percen—he rs such increase since he ourh quarer o 
FIGURE 2
Postrecession productivity growth
Source: Calculations based on U.S. Bureau o Labor Statistics,
Major Sector Productivity and Costs, Nonfarm Business Sector, Output per Hour 
(U.S.Department o Labor, 2013).
-2%0%2%4%6%8%10%109876543211413121115191817162120
    P   r   o    d   u   c    t    i   v    i    t   y   g   r   o   w    t    h    f   r   o   m    r   e   c   e   s   s    i   o   n    l   e   v   e    l
Months after end of recession

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