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Economic Snapshot for June 2011

Economic Snapshot for June 2011

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Failing to raise the debt ceiling would threaten a fragile recovery, writes Christian E. Weller in this month’s economic outlook.
Failing to raise the debt ceiling would threaten a fragile recovery, writes Christian E. Weller in this month’s economic outlook.

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Published by: Center for American Progress on Jun 27, 2011
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1Center or American Progress | Economic Snapshot or June 2011
Economic Snapshot for June 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 ProgressJune 27, 2011
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 
Te debae over ederal axes and spending has moved ron and cener as Republicansare hreaening no o raise he ederal deb ceiling unless programs are aggressively cu back. Keeping he deb ceiling in place could lower growh, slow job creaion, anddamage already depressed housing wealh levels, paricularly home equiy.Recen daa on he labor and housing marke show how ragile he recovery remains.I is crucial ha policymakers secure he gains o he recovery insead o gambling wih he economic securiy o America’s middle class. Tis means mainaining con-sumpion and invesmen growh in he shor run and addressing rade and budgedecis in he medium erm.Te curren negoiaions over uure budges and he deb ceiling hus need ond a growh-enhancing balance beween spending and revenue changes hadoes no unduly burden middle-class amilies, who have already suered rom heeconomic allou o he Grea Recession.
1. The U.S. economy continues a moderaterecovery.
Gross domesic produc, or GDP,grew a an annual rae o 1.9 percen in hers quarer o 2011, he sevenh quarer o posiive growh in a row. Consumpion grew a an annual rae o 2.2 percen, and year-over-year business invesmen growh was9.1 percen in he rs quarer o 2011. Bohconsumpion and invesmen slowed romheir growh raes a he end o 2010 as heeconomy sruggled wih higher oil prices.
See figure 1
 
2Center or American Progress | Economic Snapshot or June 2011
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)
2. The trade deficit stays high.
Te U.S. rade deci sood a 3.7 percen o GDPin he rs quarer o 2011, up rom 3.3 percen o GDP in he ourh quarer o 2010. U.S. expor growh sayed srong in he rs quarer o 2011, increasing7.6 percen, compared o an increase o 8.6 percen a he end o 2010. Bu U.S.impor growh acceleraed o 5.1 percen in he rs quarer o 2011, up rom-12.6 percen in he ourh quarer o 2010.
2
 
3. The labor market recovery slowly adds jobs in the private sector.
Te U.S.economy coninuously added privae-secor jobs rom February 2010 o May 2011 or a oal o 2.1 million jobs. Tis included 83,000 new jobs in April 2011.
3
 
4. Unemployment stays high because of a massive jobs hole.
Tere weresill 6.9 million ewer jobs in May 2011 han a he sar o he recession inDecember 2007, and he populaion has also grown since hen, puting helabor marke deeper ino he hole han he raw number suggess. Te unem-ploymen rae has hence remained subbornly high a 9.1 percen in May 2011.
4
 
5. Unemployment stays high among the most vulnerable.
Te Arican Americanunemploymen rae in April 2011 rose o 16.2 percen, he Hispanicunemploymen rae o 11.9 percen, and he unemploymen rae or whiesremained seady a 8.0 percen. Youh unemploymen sood a a high24.2 percen. And he unemploymen rae orpeople wihou a high school diploma climbedo 14.7 percen, compared o 9.5 percen orhose wih a high school diploma and 4.5percen or hose wih a college degree.
5
6. Rapidly rising oil prices threaten a fledglingrecovery.
 A gallon o regular gasoline cosabou $3.80 or more hroughou May 2011.Tis is he highes gasoline price since Augus2008.
6
 
See figure 2
7. Employer-provided health insurance benefitscontinue to disappear.
Te share o people wih employer-provided healh insurancedropped rom 64.2 percen in 2000 o 55.8 per-cen in 2009. Tis is he lowes share since 1987 when he Census sared o rack hese daa.
7
 
3Center or American Progress | Economic Snapshot or June 2011
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 $12.4 rillion (in2011 dollars) rom June 2007—is las peak—o March 2011, despie sronggains in he sock marke since early 2009. Home equiy says low, such hahomeowners on average sill own only 38.1 percen o heir homes, wih heres owed o banks.
10
Tis is he lowes share on record going back o 1952.
11. Debt levels are still high.
oal household deb equaled 114.1 percen o afer-ax income in March 2011. 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 Sepember 2004.
11
12. Mortgage troubles stay high.
One in eighmorgages is delinquen or in oreclosure.Te share o morgages ha were delin-quen was 8.3 percen in he rs quarer o 2011, and he share o morgages ha werein oreclosure was 4.5 percen.
12
 
13. Families feel the pressure.
Credi carddeauls amouned o a high 7.2 percen o all credi card deb by he rs quarer o 2011—sill 70.3 percen above he rae inourh quarer o 2007, jus beore he GreaRecession sared.
13
See figure 3
Share of mortgages that are delinquent or in foreclosure
i   g u 3 
Foreclosures Delinquencies0%2%4%6%8%10%12%
   M  a  r  -   7  9   M  a  r  -  8  4   M  a  r  -  8  9   M  a  r  -  9  4   M  a  r  -  9  9   M  a  r  -  0  4   M  a  r  -  0  9
Source: Mortgage Bankers Association, 2009, National Delinquency Survey, Washington, DC: MBAA.

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