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Economic Snapshot for May 2011

Economic Snapshot for May 2011

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The current budget negotiations thus need to find a growth-enhancing balance between spending and revenue changes that do not unduly burden middle-class families, writes Christian Weller.
The current budget negotiations thus need to find a growth-enhancing balance between spending and revenue changes that do not unduly burden middle-class families, writes Christian Weller.

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Published by: Center for American Progress on May 20, 2011
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1Center or American Progress | Economic Snapshot or May 2011
Economic Snapshot for May 2011
Christian E. Weller on the State of the Economy
Christian E. Weller, associate professor, Department of Public Policy and Public Affairs,University of Massachusetts Boston, and Senior Fellow, Center for American ProgressMay 20, 2011
Te debae over ederal budge prioriies has kep is momenum as Republicansare hreaening no o raise he ederal deb ceiling unless programs are aggres-sively cu back. Keeping he deb ceiling in place could lower growh and jeopardize job creaion, while severe spending cus could subsanially reducemiddle-class economic securiy. American amilies are only now saring o seea modes labor marke recovery srenghening. Te unemploymen rae is drop-ping, household deb coninues o decline, and nancial disress shows signs o easing. Tese enaive gains could quickly evaporae i growh, job creaion, andincome gains slowed.Policymakers have o secure he gains o he recovery while srenghening America’s middle class. Tis means mainaining consumpion and invesmengrowh in he shor run and addressing radeand budge decis in he medium erm. Tecurren budge negoiaions hus need o nda growh-enhancing balance beween spend-ing and revenue changes ha do no unduly  burden middle-class amilies who have already suered a lo rom he economic allou o heGrea Recession.
1. The U.S. economy continues a moderaterecovery.
Gross domesic produc, or GDP,grew a an annual rae o 1.8 percen in hers quarer o 2011, he sevenh quarer o posiive growh in a row. Consumpion grew 
Investment growth, year over year, 2001 to 2011
i   g u
-25%-20%-15%-10%-5%0%5%10%15%
   M  a   r  -   0   2    M  a   r  -   0   1   M  a   r  -   0   3    M  a   r  -   0  4    M  a   r  -   0   5    M  a   r  -   0   6    M  a   r  -   0    7    M  a   r  -   0   8    M  a   r  -   0   9    M  a   r  -   1   1    M  a   r  -   1   0 
 
2Center or American Progress | Economic Snapshot or May 2011
a an annual rae o 2.7 percen, and year-over-year business invesmen growh was 9 percen in he rs quarer o 2011.
1
Boh consumpion and invesmenslowed rom heir growh raes a he end o 2010 as he economy sruggled wih higher oil prices.
See figure 1
2. The trade deficit stays high.
 
Te U.S. rade deci sood a 3.8 percen o GDPin he rs quarer o 2011, up rom is las rough o 2.4 percen o GDP in hesecond quarer o 2009—he larges deci since he end o 2008. U.S. exporgrowh slowed o 4.9 percen in he rs quarer o 2011, down rom 8.6 per-cen, and U.S. impor growh acceleraed o 4.4 percen, up rom -12.6 percenin he ourh quarer o 2010.
2
 
3. The labor market recovery slowly takes hold in the private sector.
Te U.S.economy coninuously added privae-secor jobs rom February 2010 o April 2011 or a oal o 2.1 million jobs. Tis included 268,000 new jobsin April 2011.
3
 
4. Unemployment stays high because of a massive jobs hole.
 
Tere were sill7 million ewer jobs in April 2011 han a he sar o he recession in December2007 and he populaion has also grown since hen, puting he labor markedeeper ino he hole han he raw number suggess. Te unemploymen rae hashence remained subbornly high a 9 percen in April 2011.
4
 
5. Unemployment stays high among the mostvulnerable.
Te Arican American unemploy-men rae in April 2011 rose o 16.1 percen, heHispanic unemploymen rae o 11.8 percen,and he unemploymen rae or whies o 8 per-cen. Youh unemploymen sood a a high 24.9percen. And he unemploymen rae or people wihou a high school diploma climbed o 14.6percen, compared o 9.7 percen or hose wiha high school diploma and 4.5 percen or hose wih a college degree.
5
6. Rapidly rising oil prices threaten a fledglingrecovery.
A gallon o regular gasoline cos aleas $3.96 hrough he rs hree weeks o May 2011. Tis is he highes gasoline price since July 2008.
6
 
See figure 2
Inflation-adjusted gasoline prices for a gallon of regulargasoline, 1976 to 2011
i   g u
Calculations based on Board of Governors, Federal Reserve, 2009, Flow of Funds Accounts of the United States,Washington, D.C.: BOG
$1.0$1.5$2.0$2.5$3.0$3.5$4.0$4.5
   J  a   n  -    7   6    J  a   n  -   8   0    J  a   n  -   8  4    J  a   n  -   8   8    J  a   n  -   9   2    J  a   n  -   9   6    J  a   n  -   0   0    J  a   n  -   0  4    J  a   n  -   0   8 
Dollars per gallon (in 2011 dollars)
 
3Center or American Progress | Economic Snapshot or May 2011
7. Employer-provided health insurance benefits continue to disappear.
Te shareo people wih employer-provided healh insurance dropped rom 64.2 percenin 2000 o 55.8 percen in 2009. Tis is he lowes share since 1987 when heCensus sared o rack hese daa.
7
8. Family incomes drop sharply in the recession.
Median inaion-adjusedhousehold income ell 3.6 percen in 2008 and by anoher 0.7 percen in 2009.I sood a $49,777 in 2009, is lowes level in inaion-adjused dollars since1997. Whie amily income sood a $54,461, compared o Arican Americanamily income, which was $32,584, or 59.8 percen o whie income. Hispanicamily income was $38,039 in 2009, or 69.8 percen o whie income.
8
9. Poverty continues to rise.
Te povery rae sood a 14.3 percen in 2009—ishighes rae since 1994. Te Arican American povery rae was 25.8 percen,he Hispanic rae was 25.3 percen, and he whie rae was 9.4 percen in 2009.Te povery rae or children under he age o 18 sood a 20.7 percen. Morehan one-hird o Arican American children (35.7 percen) lived in povery in 2009, compared o 11.9 percen o whie children and 33.1 percen o Hispanic children.
9
10. Family wealth losses linger.
oal amily wealh was down $12.8 rillion(in 2010 dollars) rom June 2007—is las peak—o December 2010, despiean increase o $6.6 rillion in 2010 dollars rom March 2009—he lowespoin during he recession. Home equiy is also recovering bu homeownerson average sill own only 38.5 percen o heir homes, wih he res owed omorgage banks.
10
11. Debt levels are still high.
oal household deb equaled 116.1 percen o afer-ax income in December 2010. Tis is down rom a record high o 130.2 percenin Sepember 2007 bu sill higher han a any poin beore 2005.
11
12. Mortgage troubles stay high.
One in eigh morgages is delinquen or in ore-closure. Te share o morgages ha were delinquen was 8.2 percen in heourh quarer o 2010, and he share o morgages ha were in oreclosure was4.6 percen—he highes share on he Morgage Bankers Associaion’s records, which dae back o 1979.
12
 

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