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Economic Snapshot for September 2011

Economic Snapshot for September 2011

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Smart jobs policy can help struggling families in the short term while improving the foundation for faster economic growth in the future, writes Christian E. Weller.
Smart jobs policy can help struggling families in the short term while improving the foundation for faster economic growth in the future, writes Christian E. Weller.

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Published by: Center for American Progress on Sep 27, 2011
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1Center or American Progress | Economic Snapshot or September 2011
Economic Snapshot for September 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 ProgressSeptember 2011
Discussions o jobs rank high in he policy domain. Te goal o creaing jobs morequickly so ha he unemploymen rae will nally all is obvious. Te jobs policy agenda mus ocus on shor-erm suppor or sruggling amilies such as exendedunemploymen benes and lower payroll axes as well as necessary public inves-mens ha can pu people quickly back o work.Many o hese policy seps will also pay longer-erm dividends by improving heoundaion or aser economic growh in he uure. Oher seps, hough, may benecessary o improve he growh oulook or he U.S. economy over ime and oraise he compeiiveness o American-made producs and services in he globaleconomy. Policymakers have an opporuniy o pu down key markers on ax andspending prioriies wih he work o he super commitee charged wih nding ways o rein in he long-erm budge decis. Tis work will direcly impac heeconomic securiy o American amilies, who are sruggling in he weak labormarke righ now, and ha will aec he oulook or growh and uure livingsandards or years o come. Boh he shor-run and long-run economic oulook could subsanially improve wih enough poliical will, as Michael Etlinger andMichael Linden already showed.
1. Economic growth remains low.
Gross domesic produc, or GDP, grew aan annual rae o 1 percen in he second quarer o 2011. Te economy hasexpanded now by 5 percen in inaion-adjused erms, he slowes growhduring he rs eigh quarers o an economic recovery since World War II.Business invesmen expanded a a reasonable 9.9 percen in he second quar-er o 2011,
1
while expor growh slowed o 3.1 percen. Consumpion wasalmos a, expanding a only 0.4 percen, and governmen spending ell by 0.9
 
2Center or American Progress | Economic Snapshot or September 2011
Figure 1
Monthly job change since start of Great Recession
-1,000-800-600-400-2000200400600
Jobs (in thousands)
2008200920102011JanJulJanJanJanAugJulJul
percen. Economic growh is slowed in paricular because o weak consumerdemand as many people are sill ou o a job and many amilies need o savemore o pay back massive amouns o deb or compensae or low house pricesand umbling sock porolios.
2. The trade deficit stays high as imports outpace exports.
Te U.S. rade decisood a 4 percen o GDP in he second quarer o 2011, up rom is las rougho 2.4 percen o GDP in he second quarer o 2009 and he larges deci sincehe end o 2008.
2
Te solid U.S. expor perormance o he pas ew years hasno been enough o overcome even larger impor increases, puting more pres-sure on oher pars o he economy—consumpion and business invesmenchie among hem—o move he economy orward o aser growh.
3. The labor market recovery slows.
Teprivae secor coninuously added jobsrom February 2010 o Augus 2011 or aoal o 2.4 million jobs. Privae-secor jobgrowh, hough, is ose by a loss o 462,000public secor jobs a he sae and local level beween February 2010 and Augus 2011,
3
 reecing he budge roubles o sae andlocal governmens. Job growh in ac slowedsubsanially in he spring o 2011, alling ozero new jobs in Augus 2011.
4. Unemployment stays high amid weak jobgrowth.
Te unemploymen rae sood a9.1 percen in Augus 2011. Long-ermunemploymen ballooned as he unemploymen rae sayed high. In Augus2011 42.9 percen o he unemployed had been ou o and looking or a jobor more han six monhs. Te average lengh o unemploymen sayed closeo a record high wih 40.3 weeks in Augus 2011.
4
5. Labor market pressures fall especially on communities of color, young work-ers, and those with little education.
Te Arican American unemploymenrae in Augus 2011 sayed a well above average wih a high 16.7 percen andhe Hispanic unemploymen rae sayed high wih 11.3 percen, while he whieunemploymen rae was 8 percen. Youh unemploymen sood a a high 25.4percen. And he unemploymen rae or people wihou a high school diploma
 
3Center or American Progress | Economic Snapshot or September 2011
sayed high wih 14.3 percen, compared o 9.6 percen or hose wih a highschool diploma, and 4.3 percen or hose wih a college degree.
5
Vulnerablegroups have sruggled disproporionaely more amid he weak labor marke o hepas ew years han whie workers, older workers, and workers wih more educa-ion. Bu even hose groups ha are beter han heir counerpars in he weak labor marke suer remendously rom high and long-erm unemploymen.
6. Household incomes continue to drop amid prolonged labor market weak-nesses.
Median inaion-adjused household income—hal o all householdshave more and he oher hal has less—sood a $49,445 in 2010, is loweslevel in inaion-adjused dollars since 1996. I ell again by 2.3 percen in2010, an acceleraed decline afer median income dropped by 0.7 percen in2009. American amilies saw ew gains during he recovery beore he crisishi in 2008 and experienced no income gains during he curren economicrecovery afer 2009.
6
7. Poverty continues to rise across a wide spectrum.
Te povery rae rose o 15.1percen in 2010—is highes rae since 1993. Te Arican American povery rae was 27.4 percen, he Hispanic rae was 26.6 percen, and he whie rae was 9.9percen in 2010. Te povery rae or children under he age o 18 sood a 22 per-cen. More han one-hird o Arican American children (39.1 percen) lived inpovery in 2010, compared o 35 percen o Hispanic children and 12.4 percen o  whie children.
7
Te prolonged economic slump ollowing an excepionally weak labor marke beore he crisis has aken a massive oll on he mos vulnerable.
8. Employer-provided health insurance benefits continue to disappear.
Te shareo people wih employer-provided healh insurance dropped rom 65.1 percenin 2000 o 55.3 percen in 2010. Tis is he lowes share since 1987 when heCensus sared o rack hese daa.
8
Families’ income woes are hus urherexacerbaed by less access o aordable healh insurance since amilies will haveo save more han in he pas o prepare or evenual economic emergencies.
9. Family wealth losses linger.
oal amily wealh is down $12.8 rillion (in 2011dollars) rom June 2007—is las peak—o June 2011. Home equiy says low,such ha homeowners on average sill own only 38.6 percen o heir homes, wih he res owed o banks.
9
Tis is he lowes share on record, going back o1952. Households, already sruggling wih low incomes in a weak labor marke,consequenly eel growing pressures o save more and consume less. Te per-sonal savings rae increased rom 2.3 percen o afer-ax income in June 2007

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