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Economic Snapshot: December 2013

Economic Snapshot: December 2013

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Economic data show that this is a recovery for the rich—not a recovery for everyone.
Economic data show that this is a recovery for the rich—not a recovery for everyone.

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Published by: Center for American Progress on Dec 18, 2013
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1 Center for American Progress | Economic Snapshot: December 2013
Economic Snapshot: December 2013
Christian E. Weller on the State of the Economy
By Christian E. Weller and Sam Ungar December 19, 2013
People are angry a he policy responses o he economy’s subpar perormance because policymakers seem o have given up rying o help he millions o Americans who are sill sruggling. Policymakers in Washingon, or example, are now celebraing a bipar-isan budge deal ha ends exended unemploymen benefis or millions o long-erm unemployed workers. Observers can breahe easier because his ime, radical conserva-ives did no hold he governmen’s finances hosage o heir demands, and anoher governmen shudown has been avoided. I is, indeed, a very low bar or Americans’ expecaions o policymakers i people are saisfied when hey do no wreak havoc on governmen finances and he economy.Bu American ciizens should no be saisfied and should demand more. All economic measures ha mater o he majoriy o people󲀔job growh, economic growh, pro-duciviy growh, povery reducion, and income growh󲀔have perormed worse in his recovery, which sared in June 2009, han in previous recoveries o a leas equal lengh.
1
 Middle-class amilies coninue o sruggle in he wake o he Grea Recession and are looking or help rom heir eleced officials.Te curren economy only works or hose lucky ew wih high incomes who depend in large measure on corporae profis hrough dividends and sock marke gains or heir financial well-being. Income inequaliy sayed high and increased hroughou he recovery. Corporae profis recovered more quickly han in previous recoveries o very high levels.Policymakers need o ocus on building an economy ha works or everybody. Tis  will no happen overnigh and will require a wide range o comprehensive policies o grow he economy rom he middle ou. Such policies include invesmens in educaion, higher minimum wages, more opporuniies o join a union, and beter help or people  who wan o save.
 
2 Center for American Progress | Economic Snapshot: December 2013
1.
Economic growth lags behind previous recoveries.
 
Gross domesic produc, or GDP, increased in he hird quarer o 2013 a an inflaion-adjused annual rae o 3.6 percen. Domesic consumpion increased by an annual rae o 1.4 percen, housing spending subsanially grew by 13 percen, while business invesmen growh slowed o 3.5 percen. Expors increased by 3.7 percen in he firs quarer, and governmen spending was essenially fla wih an increase o only 0.4 percen.
2
 Te economy has now expanded by 10.2 percen rom June 2009 o Sepember 2013󲀔is slowes expansion during recoveries o a leas equal lengh.
3
 Policymakers need o ocus on srenghening key pars o economic growh, paricularly invesmen and expors,  wih argeed measures ha go beyond remov-ing fiscal uncerainy.2.
Improvements to U.S. competitiveness lag behind previous business cycles.
 
Produciviy growh, measured as he increase in inflaion-adjused oupu per hour, is key o increasing liv-ing sandards. U.S. produciviy has risen by 6.4 percen rom June 2009 o Sepember 2013, he firs 17 quarers o he economic recovery since he end o he Grea Recession.
4
 Tis compares o an average o 11.4 percen during all previous recoveries o a leas equal lengh.
5
 No previous recovery had lower produciviy growh han he curren one. Produciviy growh is he main driving orce or he counry’s abiliy o raise liv-ing sandards. Weaker produciviy growh han in he pas will make i harder o build a srong middle class, requiring policymakers’ atenion o inves in U.S. compeiiveness.3.
The housing market continues to recover from historic lows.
 
New-home sales amouned o an annual rae o 444,000 in Ocober 2013󲀔a 21.6 percen increase rom he 365,000 homes sold in Ocober 2012 bu well below he hisor-ical average o 698,000 homes sold beore he Grea Recession.
6
 Te median new-home price in Ocober 2013 was $245,800, down slighly rom one year earlier.
7
 
Exising-home sales  were up by 6 percen in Ocober 2013 rom one  year earlier, and he median price or exising homes was up by 12.8 percen during he same period.
8
 Home sales have o go a lo urher, given ha homeownership in he Unied Saes
FIGURE 1
GDP growth in recovery in comparison to previous recoveries
901201251301151101051009501234567891011121314151617
    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    )
Mar ’61Mar ’75Dec ’82Mar ’91Dec ’01Jun ’09Number of quarters of economic recoveryRecovery after the Great Recession
Source: 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
Productivity growth in recovery compared to previous recoveries
0%2%4%6%8%10%12%1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17Average previous recoveriesCurrent economic recovery
Source: Authors’ calculations based on productivity growth (output per hour) from U.S. Bureau of Labor Statistics,
Current Employment Statistics
 (U.S. Department of Labor, 2013).
 
3 Center for American Progress | Economic Snapshot: December 2013
sood a 65.3 percen in he hird quarer o 2013, down rom 68.2 percen beore he recession. Te curren homeownership raes are similar o hose recorded in 1996, well beore he mos recen housing bubble sared.
9
 
 Alhough he housing-marke recovery sared laer han he wider economic recovery󲀔and sared ou a a record low󲀔he housing marke has laely conribued a much-needed boos o economic progress. As such, here is sill pleny o room or he housing marke o provide more simulaion o he economy more broadly. Te fledgling housing recovery could gain urher srengh i policymakers suppor economic growh and  job creaion a he same ime.4.
Moderate labor-market recovery shows less job growth than in previous recoveries.
 
Tere were 6.2 million more jobs in November 2013 han in June 2009. Te privae secor added 6.9 million jobs during his period. Te loss o nearly 620,000 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.
10
 Te oal number o jobs has now grown by 4.7 percen during his recovery, compared o an average o 11.6 percen during all prior recoveries o a leas equal lengh.
11
 Tose looking or jobs sill need assisance such as exended unemploymen insurance benefis.5.
Employment opportunities grow very slowly for people in their prime earning years.
 
Te employed share o he populaion rom ages 25 o 54󲀔which is una-eced by he aging o he overall populaion󲀔was 75.9 percen in November 2013. Tis was he same level as in June 2009 and  well below he levels since he mid-1980s and  beore he Grea Recession sared in 2007. Te employed share o he populaion has on average grown by 3 percenage poins a his sage during previous recoveries o a leas equal lengh.
12
 Specifically, here has been insufficien job growh o creae real economic opporuniies or people in he mids o heir main earning years when hey need hose opporuniies he mos.6.
Employer-sponsored benefits disappear.
 Te share o people wih employer-sponsored 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.
13
 Te share o privae-secor workers who paricipaed in a reiremen plan a work ell o 39.4 percen in 2012, down rom 41.5 percen in 2007.
14
 
FIGURE 3
Employment-to-population rate for 25–54 year-olds, 1947–2013
60%80%
   1   9  4   8   1   9   5   3   1   9   5   8   1   9  6   3   1   9  6   8   1   9   7   3   1   9   7   8   1   9   8   3   1   9   8   8   1   9   9   3   1   9   9   8   2  0  0   3   2  0  0   8   2  0   1   3
65%70%75%85%
    S    h   a   r   e   o    f   p   o   p   u    l   a    t    i   o   n     (    i   n    p   e   r   c   e   n    t    )
Source: U.S. Bureau of Labor Statistics,
Current Population Survey 
 (U.S. Department of Labor, 2013).

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