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Economic Snapshot: November 2013

Economic Snapshot: November 2013

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Economic data show that Congress’s fiscal brinksmanship is keeping businesses from investing in America and consequently holding back overall growth.
Economic data show that Congress’s fiscal brinksmanship is keeping businesses from investing in America and consequently holding back overall growth.

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Published by: Center for American Progress on Nov 26, 2013
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1 Center for American Progress | Economic Snapshot: November 2013
Economic Snapshot: November 2013
Christian E. Weller on the State of the Economy
By Christian E. Weller and Sam Ungar November 27, 2013
Te U.S. economy coninued is slow bu seady recovery in November, leaving room or policymakers o enac policies ha could accelerae job creaion and economic growh. Te curren budge negoiaions in Congress offer such an opporuniy o creae a pro-growh budge and end he fiscal uncerainy ha has hampered business inves-men over he pas wo and a hal years. Faser growh requires sharper increases in business invesmens. New analysis rom he Cener or American Progress, however, shows ha businesses slowed he pace o inves-ing in lae 2011 and urher slowed i in 2013, as Congress hobbled rom one fiscal crisis o he nex manuacured by radical conservaives.
1
 Te fiscal uncerainy slowed inves-men growh rom an already modes pace. Moreover, business invesmen has also been slow because o slow income growh; ha is, amilies are no increasing consumpion as enough o warran aser invesmens. Businesses have he wherewihal o inves more. Profis are hovering near prereces-sion highs afer recovering quickly rom he dephs o he Grea Recession. However, corporaions have kep much o his addiional money in near-record sockpiles o cash, or have used i o keep shareholders happy hrough sock repurchases and dividend payous. Invesing in new equipmen such as compuers and rucks and srucures such as manuacuring plans and office buildings has been a lower prioriy. Bu policymakers can help grow our economy. Tis requires ocusing on aser wage and income growh, invesing in boh shor-erm and long-erm American compeiiveness, and ending fiscal brinksmanship. In shor, i requires enacing he smar progressive policies conained in CAP’s landmark repor, “300 Million Engines o Growh,”
2
 published in June. Wih posiive signs in his monh’s labor repor and upward revisions over he pas ew monhs,
3
 i is becoming increasingly eviden ha he exising recovery is sable, bu no robus enough o gain necessary momenum o quickly lower he unemploymen rae and raise living sandards or millions o sruggling amilies. Focusing on job creaion and invesmen expansions raher han harmully disrupive fiscal squabbles can creae a much sronger and sel-susaining economic recovery.
 
2 Center for American Progress | Economic Snapshot: November 2013
1.
The economy continues to grow slowly.
 
Gross domesic produc, or GDP, increased in he hird quarer o 2013 a an inflaion-adjused annual rae o 2.8 percen. Domesic consump-ion increased by an annual rae o 1.5 percen, housing spending subsanially grew by 14.6 percen, while business invesmen growh slowed o 1.6 percen. Expors increased by 4.5 percen in he firs quarer and governmen spending was essenially fla wih an increase o only 0.2 percen.
4
 Tese numbers show ha here is room o expand growh in all areas o he economy. Policy soluions should hereore aim o ease he srain o U.S. fiscal auseriy on he economy, creae fiscal cerainy, and inves in people, inrasrucure, and innovaion. 2.
The moderate labor-market recovery continues in its fourth year.
 Tere were 6 million more jobs in Ocober 2013 han in June 2009. Te privae secor added 6.7 million jobs during his period. Te loss o more han 621,000 sae and local governmen jobs explains he difference 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, firefighers, and police officers, among ohers.
5
 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h, raher han a blind obsession wih defici reducion a all coss, could creae millions o jobs ha America’s middle class desperaely needs. 3.
Some communities continue to struggle disproportionately from unemployment.
 
Te unemploymen rae sood a 7.3 percen in Ocober 2013. Te Arican American unem-ploymen rae was 13.1 percen in Ocober 2013, he Hispanic unemploymen rae was 9.1 percen, and he whie unemploymen rae  was 6.3 percen. Meanwhile, youh unemploy-men sood a 22.2 percen. Te unemploymen rae or people wihou a high school diploma icked up o 10.9 percen, compared o 7.3 percen or hose wih a high school degree, 6.3 percen or hose wih some college educaion, and 3.8 percen or hose wih a college degree.
6
 Populaion groups wih higher unemploymen raes have sruggled disproporionaely more amid he weak
FIGURE 1
Economic growth over the first four years of a recovery
120110100
123456789101112131415161817
130
    G   r   o   w    t    h    i   n    d   e   x    (    l   a   s    t   q   u   a   r    t   e   r   o    f   r   e   c   e   s   s    i   o   n   =    1    0    0    )
Number of quarters of economic recoveryRecovery after the Great Recession
March ’61March ’75December ’82March ’91December ’01June ’09
Authors’ calculations based on U.S. Bureau of Economic Analysis,
National Income and Product Accounts
 (U.S. Department of Commerce, 2013). Calculations only done for recoveries that have lasted at least four years.
FIGURE 2
October 2013 unemployment rate by race
6.3%9.1%13.1%WhiteHispanicAfrican American
Source: U.S. Bureau of Labor Statistics,
Current Population Survey 
 (U.S. Department of Labor, 2013).
 
3 Center for American Progress | Economic Snapshot: November 2013
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.
7
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 house-holds in 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. Census Bureau sared keeping records in 1967. Median inflaion-adjused household income sood a $51,017 in 2012, is lowes level in inflaion-adjused dollars since 1995. And he povery rae remains high, a 15 percen in 2012, as he economic slump coninues o ake a massive oll on he mos vulnerable ciizens.
8
5.
Poverty stays high.
 
Te povery rae remained fla a 15 percen in 2012, he mos recen year or which daa are available. Te Arican American povery rae was 27.2 percen, he Hispanic povery rae was 25.6 percen, and he whie povery rae was 9.7 percen. 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 per-cen󲀔lived in povery in 2012, compared o 33.8 percen o Hispanic children and 12.3 percen o whie children.
9
 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.
10
 Te share o privae-secor  workers who paricipaed in a reiremen plan a work ell o 39.2 percen in 2011, down rom 42 percen in 2007.
11
 Families now have less economic securiy han in he pas due o ewer employmen-based benefis, which requires ha hey have more privae savings o make up he difference.7.
Family wealth losses still linger.
 In June 2013, oal amily wealh was down $1.5 rillion in 2013 dollars rom March 2007, is previous peak. On average, homeown-ers own only 49.8 percen o heir homes󲀔compared o he long-erm average o 61 percen beore he Grea Recession󲀔wih he res owed o banks.
12
 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.

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