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Economic Snapshot for July 2011

Economic Snapshot for July 2011

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Policymakers need to resolve the debt limit debate in a way that doesn’t hurt economic growth, writes Christian E. Weller.
Policymakers need to resolve the debt limit debate in a way that doesn’t hurt economic growth, writes Christian E. Weller.

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Published by: Center for American Progress on Jul 14, 2011
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1Center or American Progress | Economic Snapshot or July 2011
Economic Snapshot for July 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 ProgressJuly 14, 2011
 Jobs and he deb ceiling—he amoun ha he ederal governmen can borrow  wihou approval rom Congress—dominae economic policy discussions as wellas he naional conversaion. Job growh is oo slow o lower he unemploymenrae , and he Republican majoriy in he House o Represenaives is hreaeningno o raise he deb ceiling unless he increase is ied o massive spending cus.Drasic spending cus could slow he economy and job growh even urher. Leavinghe deb ceiling in place, hough, would also resul in sharp spending cus in addi-iono massive nancial marke disrupionsandhigher ineres raes or some ime o come. Businesses are undersandably worried abou Congress’s inabiliy o comeo an agreemen on he deb ceiling ha proecs economic growh, and hey areputing o hiringin his ime o heighened economic uncerainy.Te disrupions caused by he deb ceiling debae add o concerns over uureeconomic growh. Families sill sruggle wih massive amouns o deb and highoreclosure raes,large swings in oil prices his spring and summer urher disrup business and amilies’ spending plans , and widening rade decis could pu he brakes on uure economic growh.Policymakers need o proec he sruggling recovery, and hey need o balanceha wih laying he groundwork or srong uure growh. Tis means mainainingconsump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 he deb ceiling hus need o nd a growh-enhanc-ing balance beween spending and revenue changes.Policymakers should nourher burden amilies, who have already suered remendously rom he allouo he Grea Recession. 
 
2Center or American Progress | Economic Snapshot or July 2011
1. The U.S. economy continues a moder-ate recovery.
Gross domesic produc, orGDP, grew a an annual rae o 1.9 percenin he rs quarer o 2011, which is hesevenh quarer o posiive growh in arow. Consumpion grew a an annual raeo 2.2 percen, and year-over-year businessinvesmen growh was 9.1 percen in hers quarer o 2011.
1
Boh consumpion andinvesmen slowed rom heir growh raesa he end o 2010 as he economy sruggled wih higher oil prices.
2. The trade deficit stays high.
Te U.S. radedeci sood a 3.7 percen o GDP in 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 a 7.6 percen in he rs quarer o 2011, downrom 8.6 percen a he end o 2010. Bu U.S. impor growh acceleraed o5.1 percen in he rs quarer o 2011, up rom -12.6 percen in he ourhquarer o 2010.
2
 
3. The labor market recovery slows in the private sector.
Te U.S. economy con-inuously added privae-secor jobs rom February 2010 o June 2011 or a oalo 2.2 million jobs. Bu job growh slowed subsanially in May and June 2011.Te economy added an average o only 65,000 per monh, which is down roman average o more han 203,000 jobs per monh beween January and April2011.
3
 
See figure 1
4. Unemployment slowly climbs higher.
Te unemploymen rae climbed back up o 9.2 percen in June 2011.
4
Te labor marke is expanding oo slowly oaddress he massive jobs hole. Tere were sill 7 million ewer jobs in June 2011han a he sar o he recession in December 2007. Te populaion also hasgrown since hen, which pus he labor marke deeper ino he hole han heraw number suggess.
5. Length of long-term unemployment reaches record highs.
Fory-our perceno he unemployed have been ou o work and looking or a job or more hansix monhs. Te average lengh o unemploymen soared o a record 39.9 weeksin June 2011.
figure 1
Monthly job change since start of Great Recession
-1,000-800-600-400-2000200400600
    J   a   n  -    0    8    M   a   r  -    0    8    M   a   y  -    0    8    J   u    l  -    0    8    S   e   p  -    0    8    N   o   v  -    0    8    J   a   n  -    0    9    M   a   r  -    0    9    M   a   y  -    0    9    J   u    l  -    0    9    S   e   p  -    0    9    N   o   v  -    0    9    J   a   n  -    1    0    M   a   r  -    1    0    M   a   y  -    1    0    J   u    l  -    1    0    S   e   p  -    1    0    N   o   v  -    1    0    J   a   n  -    1    1    M   a   r  -    1    1    M   a   y  -    1    1
Jobs (in thousands)
 
3Center or American Progress | Economic Snapshot or July 2011
6. Unemployment stays high among the most vulnerable.
Te Arican Americanunemploymen rae in June 2011 sayed a a high 16.2 percen, he Hispanicunemploymen rae was 11.6 percen, and he unemploymen rae or whiesrose o 8.1 percen. Youh unemploymen sood a a high 24.5 percen. Andhe unemploymen rae or people wihou a high school diploma sayed higha 14.3 percen, compared o 10.0 percen or hose wih a high school diplomaand 4.4 percen or hose wih a college degree.
5
7. Family incomes drop sharply.
Median inaion-adjused household incomeell 3.6 percen in 2008 and by anoher 0.7 percen in 2009. I sood a $49,777in 2009, is lowes level in inaion-adjused dollars since 1997. 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.
6
 
8. Employer-provided health insurance benefits continue to disappear.
 Te share o people wih employer-provided healh insurance dropped rom64.2 percen in 2000 o 55.8 percen in 2009. Tis is he lowes share since1987 when he Census sared o rack hese daa.
7
 
9. Poverty continues to rise.
Te povery rae sood a 14.3 percen in 2009—is highes rae since 1994. Te Arican American povery rae was 25.8 per-cen, he Hispanic rae was 25.3 percen, and he whie rae was 9.4 percen in2009. 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 childrenand 33.1 percen o Hispanic children.
8
10. Family wealth losses linger.
oal amily  wealh was down $12.4 rillion (in 2011dollars) rom June 2007—is las peak—oMarch 2011 despie srong gains in hesock marke since early 2009. Home equiy says low, such ha homeowners on averagesill own only 38.1 percen o heir homes, wih he res owed o banks.
9
Tis is helowes share on record, going back o 1952.
See figure 2
figure 2
Home equity as share of house values
30%40%50%60%70%80%90%
   M  a   r  -   5   2    M  a   r  -   5    7    M  a   r  -   6   2    M  a   r  -   6    7    M  a   r  -    7   2    M  a   r  -    7    7    M  a   r  -   8   2    M  a   r  -   8    7    M  a   r  -   9   2    M  a   r  -   9    7    M  a   r  -   0   2    M  a   r  -   0    7 
Percent of house value

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