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Economic Snapshot: September 2013

Economic Snapshot: September 2013

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As we draw closer to a fiscal crisis, Congress must not allow the American economy to be held hostage by radicals bent on scorching the earth.
As we draw closer to a fiscal crisis, Congress must not allow the American economy to be held hostage by radicals bent on scorching the earth.

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Published by: Center for American Progress on Sep 30, 2013
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1Center or American Progress | Economic Snapshot: September 2013
New daa released his monh conrm ha he economic recovery is coninuing a aslow bu seady pace. Te pace o he recovery remains oo slow, however, o make aquick and meaningul den in he unemploymen rae; par o he recen drop in unem-ploymen is due o people leaving he labor orce alogeher raher han people ndingnew jobs.Counervailing orces coninue o hold back he recovery, paricularly he ugly messo “managemen by crisis” ha characerizes curren ederal scal policy. wo separaeissues sand ou:
The across-the-board spending cuts known as sequestration continue.
Tese cusharm overall spending and growh in he presen and hey delay necessary improve-mens—invesing in inrasrucure, innovaion, and educaion, or example—hus jeopardizing sronger economic growh in he uure.
Fiscal policy has become unpredictable for businesses and households
.
A radicalminoriy o members o Congress, butressed by vocal ouside groups, is holding heederal budge and he economy hosage o urher an exremis agenda by no pass-ing a sensible, growh-enhancing budge and by reusing o uncondiionally increas-ing he deb ceiling, beyond which he ederal governmen canno borrow wihoucongressional approval.Congress is also unable o do is job because a righ-wing minoriy wans o repeal he Aordable Care Ac, which was passed by a majoriy o Congress and upheld by heSupreme Cour. Congress is hus unable o pass a budge as he conservaive majoriy in he House bends o he will o his radical minoriy, and i is unwilling o pay he billsi has already racked up by uncondiionally raising he ederal deb ceiling, which heederal governmen will reach some ime in Ocober.
Economic Snapshot: September 2013
Christian E. Weller on the State of the Economy
By Christian E. Weller and Sam UngarSeptember 2013
 
2Center or American Progress | Economic Snapshot: September 2013
Te resul is remendous uncerainy over wheher he ederal governmen will say open beyond Sepember 30—he end o he ederal governmen’s scal year—which bills will be paid when, which programs will coninue in he uure, and which conracs will be exended. Households ha rely on governmen checks, such as Social Securiy and Medicare recipiens, may pospone heir spending decisions. Businesses couningon governmen conracs o build roads, schools, or bridges may delay hiring and inves-ing in new equipmen. And nancial markes could exrac a risk premium in he ormo higher ineres raes on governmen deb i his uncerainy coninues. Oher ineresraes on morgages and business loans, or insance, could ollow sui since all ineresraes are ied o he ineres raes on governmen deb. Higher ineres raes would leado less consumpion and less invesmens, slowing he recovery urher.Congress appears o have los sigh o wha is imporan o millions o Americans: moregood, well-paying jobs ha allow employees o ake care o heir amilies, say ou o deb, and save or heir uure. Congress needs o pass a budge ha enhances raherhan hurs growh. And i needs o own up o is pas spending decisions and raise hedeb ceiling wihou condiions and delay. American amilies have suered enough dur-ing and aer he Grea Recession o see heir economic orunes become he pawns in apoliical game o chicken.1.
The economy continues to grow slowly.
Gross domesic produc, or GDP,increased in he second quarer o 2013 a an inaion-adjused annual rae o 2.5percen. Domesic consumpion increased by an annual rae o 1.8 percen, housingspending subsanially grew by 12.9 percen, and business invesmen acceleraed by 4.4 percen. Expors increased by 8.6 percen in he rs quarer, bu governmenspending shrank again by 0.9 percen, slowing overall growh.
1
 Te U.S. economy was 9.2 percen larger in June 2013 han in June 2009 (in ina-ion-adjused erms), when he recovery sared.
2
On average, however, he economy has expanded by 19.1 percen—more han wice as as—during he rs our yearso a recovery, in recoveries ha lased a leas our years.
3
Fiscal auseriy abroadand a home is huring economic growh. Policy soluions should hereore aim oease he srain o U.S. scal auseriy on he economy and replace across-he-boardspending cus wih a scal policy approach ha can acually enhance raher hanslow economic growh, while also reducing long-erm decis.2.
The moderate labor-market recovery continues in its fourth year.
 
Tere were 5.6million more jobs in June 2013 han in June 2009, when he economic recovery of-cially sared, and he privae secor added 6.3 million jobs during his period. Teloss o more han 678,000 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 ofcers,among ohers.
4
Job creaion should be a op policy prioriy since privae-secor job
 
3Center or American Progress | Economic Snapshot: September 2013
growh is sill oo weak o quickly overcome oher job losses and rapidly lower heunemploymen rae. A reorienaion o ax and spending policies o srenghen eco-nomic growh raher han a blind obsession wih deci reducion a all coss couldcreae millions o jobs ha America’s middle class desperaely needs.3.
Some communities continue to struggle disproportionately from unemploy-ment.
Te unemploymen rae sood a 7.3 percen in June 2013. Te Arican American unemploymen rae was 13 percen in June 2013, he Hispanic unem-ploymen rae was 9.3 percen, and he whie unemploymen rae was 6.4 percen.Meanwhile, youh unemploymen sood a 22.7 percen. Te unemploymen raeor people wihou a high school diploma icked up o 11.3 percen, compared o 7.6percen or hose wih a high school degree, 6.1 percen or hose wih some collegeeducaion, and 3.5 percen or hose wih a college degree.
5
Populaion groups wihhigher 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.Policymakers should heed he recommendaions in
 All-In Naion
—a new book romhe Cener or American Progress and PolicyLink—on building a srong and diverse workorce ha draws rom all communiies.
6
4.
The rich continue to pull away from most Americans.
 
Incomes o households inhe 95h percenile—hose wih incomes o $191,000 in 2012, he mos recen yearor which daa are available—were more han nine imes he incomes o householdsin he 20h percenile, whose incomes were $20,599. 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 $51,017 in 2012, 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 2012, as he economic slumpconinues o ake a massive oll on he mos vulnerable ciizens.
7
5.
Poverty stays high.
Te povery rae remained a a 15 percen in 2012, he mosrecen year or which daa are available. Te Arican American povery rae was 27.2percen, he Hispanic povery rae was 25.6 percen, and he whie rae was 9.7 per-cen. Te povery rae or children under he age o 18 sood a 21.8 percen. Morehan one-hird o Arican American children—37.9 percen—lived in povery in2012, compared o 33.8 percen o Hispanic children and 12.3 percen o whie chil-dren.
8
Te prolonged economic slump, ollowing an excepionally weak labor marke beore he crisis, has aken a massive oll on our counry’s mos vulnerable ciizens.6.
Employer-sponsored benefits disappear.
 
Te share o people wih employer-spon-sored healh insurance dropped rom 59.8 percen in 2007 o 54.9 percen in 2012,he mos recen year or which daa are available.
9
Te share o privae-secor work-ers who paricipaed in a reiremen plan a work ell o 39.2 percen in 2011, down

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