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Economic Snapshot: January 2014

Economic Snapshot: January 2014

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To help the middle class and create jobs, Congress should pass a one-year extension of unemployment benefits and raise the federal minimum wage.
To help the middle class and create jobs, Congress should pass a one-year extension of unemployment benefits and raise the federal minimum wage.

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Published by: Center for American Progress on Jan 21, 2014
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1 Center for American Progress | Economic Snapshot: January 2014
Economic Snapshot: January 2014
Christian E. Weller on the State of the Economy
By Christian E. Weller and Sam Ungar January 21, 2014
Congress has missed anoher opporuniy o help sruggling Americans: I ailed o pass he desperaely needed exension o unemploymen insurance benefis las week ha  would have immediaely helped more han 1 million long-erm unemployed people. Tese people are now losing heir benefis, which exacerbaes heir sruggles.  While he economy and he labor marke have been in recovery mode or several years now, he pace o his recovery has been slow. Ordinary Americans have seen ew benefis rom he economic gains, as unemploymen has only slowly receded, povery has risen, and incomes have allen. Te wealhy, on he oher hand, have seen handsome gains rom a sock marke run-up ha wen hand in hand wih sharp increases in corporae profis. I is ime o make sure ha he economy works or everybody. Te firs order o busi-ness has o be helping hose sruggling he mos in he modes labor-marke recovery. o his end, Congress should pass a one-year exension o long-erm unemploymen  benefis and raise he ederal minimum wage so ha hose Americans who have a job can acually afford o pay or heir expenses. Nex, policymakers should ocus on boos-ing economic growh hrough invesmens in inrasrucure and educaion. Tis should also help creae aser job growh. Tese seps would provide a good sar o creaing a healhier economy and a sronger middle class.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 4.1 percen. Domesic consumpion increased by an annual rae o 2 percen and hous-ing spending subsanially grew by 10.3 percen, while business invesmen growh held seady a 4.8 percen. Expors increased by 3.9 percen in he firs quarer, and governmen spending was essenially fla, wih an increase o only 0.4 percen.
 Te economy expanded by 10.3 percen rom June 2009 o Sepember 2013󲀔is slowes expansion during recoveries o a leas equal lengh.
 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 removing fiscal uncerainy.
2 Center for American Progress | Economic Snapshot: January 2014
GDP growth in recovery in comparison to previous recoveries
    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 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.
Productivity growth in recovery compared to previous recoveries
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17Average previous recoveriesCurrent economic recovery10%12%6%8%2%0%4%
Source: Authors’ calculations based on productivity growth (output per hour) from Bureau of Labor Statistics,
Current Employment Statistics
 (U.S. Department of Labor, 2013).
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 living sandards. U.S. produciviy rose by 6.7 percen rom June 2009 o Sepember 2013, he firs 17 quarers o he economic recovery since he end o he Grea Recession.
 Tis compares o an average o 11.4 percen during all previous recoveries o a leas equal lengh.
 No previous recovery had lower produciviy growh han he curren one. Produciviy growh is he main driving orce behind he counrys abiliy o raise living sandards. Weaker produciviy growh han in he pas will make i harder o build a srong middle class, requir-ing 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 464,000 in November 2013󲀔a 16.6 percen increase rom he 398,000 homes sold in November 2012 bu well below he hisorical average o 698,000 homes sold  beore he Grea Recession.
 Te median new-home price in November 2013 was $270,900, up rom one year earlier.
 Exising-home sales  were down by 1.2 percen in November 2013 rom one year earlier, bu he median price or exising homes was up by 9.4 percen dur-ing he same period.
 Home sales have o go a lo urher, given ha homeownership in he Unied Saes sood a 65.3 percen in he hird quarer o 2013, down rom 68.2 percen  beore he recession. Te curren homeown-ership raes are similar o hose recorded in 1996, well beore he mos recen housing  bubble sared.
 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.
3 Center for American Progress | Economic Snapshot: January 2014
Employment-to-population ratio for 25–54 year-olds, 1947–2013
   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
    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: Bureau of Labor Statistics,
Current Population Survey 
 (U.S. Department of Labor, 2014).
Moderate labor-market recovery shows less job growth than in previous recoveries.
 Tere were 6.3 million more jobs in November 2013 han in June 2009. Te privae secor added 7 million jobs during his period. Te loss o more han 640,000 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 each-ers, bus drivers, firefighers, and police officers, among ohers.
 Te oal number o  jobs has now grown by 4.8 percen during his recovery, compared o an average o 11.6 percen during all prior recoveries o a leas equal lengh.
 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 unaffeced by he aging o he overall populaion󲀔was 76.1 percen in November 2013. Tis was  jus above he level recorded in June 2009 and well below he levels recorded 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 3.1 percenage poins a his sage dur-ing previous recoveries o a leas equal lengh.
 Specifically, here has been insu-ficien job growh o creae real economic opporuniies or people in he mids o heir main earning years󲀔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.
 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.
 Families now have less economic securiy han in he pas due o ewer employmen-based benefis, which requires hem o have more privae savings o make up he difference.7.
Some communities continue to struggle disproportionately from unemployment.
 Te unemploymen rae sood a 6.7 percen in November 2013: Te Arican American unemploymen rae was 11.9 percen; he Hispanic unemploymen rae was 8.3 percen; and he whie unemploymen rae was 5.9 percen. Meanwhile, youh unemploymen sood a 20.2 percen. Te unemploymen rae or people wihou a high school diploma icked down o 9.8 percen, compared o 7.1 percen or hose wih a high school degree,

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