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Economic Snapshot for October 2011

Economic Snapshot for October 2011

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Policy needs to focus on creating more and better jobs more quickly, writes Christian E. Weller.
Policy needs to focus on creating more and better jobs more quickly, writes Christian E. Weller.

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Published by: Center for American Progress on Oct 31, 2011
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1Center or American Progress | Economic Snapshot or October 2011
Economic Snapshot for October 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 ProgressOctober 2011
 We are living hrough a wo-aced economy. On one hand, corporae pros arehigh, corporae cash holdings are soaring, and income gains are prolieraingamong he rich. On he oher, job growh is meager, unemploymen says high,and America’s middle class sees he oundaion or a beter lie omorrow erode ina sea o deb. Botom line: Te economy is no working or millions o people whoare looking or jobs and acing remendous economic uncerainy.Policy needs o ocus on creaing more and beter jobs quicker han has been hecase in he economic expansion so ar. Tis can happen hrough necessary publicinvesmens ha can promply pu people back o work, as well as exended unem-ploymen benes and lower payroll axes, or insance.Policymakers have an opporuniy o pu down key markers on ax and spendingprioriies wih he work o he super commitee charged wih nding ways o reinin he long-erm budge decis. Tis work will direcly impac he economic secu-riy o sruggling American amilies and he oulook or growh and uure livingsandards or years o come.
•
Economic growth remains low.
Gross domesic produc, or GDP, grew a anannual rae o 2.5 percen in he hird quarer o 2011. Te economy has expandednow by 5.6 percen in inaion-adjused erms, he slowes growh during hers nine quarers o an economic recovery since World War II. Business inves-men expanded a a srong 16.3 percen in he hird quarer o 2011, while exporgrowh remained subpar wih 4.0 percen, consumpion regained some srengh,expanding a 2.4 percen, bu only because personal saving ell precipiously. Andgovernmen spending was a. Economic growh is sill oo low o creae sucien
 
2Center or American Progress | Economic Snapshot or October 2011
Figure 1
Monthly job change since start of Great Recession
-1,000-800-600-400-2000200400600
Jobs (in thousands)
Jan ‘08 July ‘08 Jan ‘09 July ‘09 Jan ‘10 July ‘10 Jan ‘11 July ‘11
 jobs o subsanially reduce he unemploymen rae. Low personal income growhis holding back consumer demand and scal roubles o governmens in heUnied Saes and abroad impede U.S. economic growh.
•
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 rough o 2.4 percen o GDP in he second quarer o 2009 and he larges deci since heend o 2008.
1
Te solid U.S. expor perormance o he pas ew years has no beenenough o overcome even larger impor increases, led in par by higher oil prices.Tis pus more pressure on oher pars o he economy—consumpion and busi-ness invesmen chie among hem—o generae aser economic growh and jobs.
•
The labor market recovery slows.
Teprivae secor coninuously added jobs romFebruary 2010 o Sepember 2011 or aoal o 2.6 million jobs. And privae-secorgrowh slowed subsanially, rom May 2011hrough Sepember 2011, averaging only 105,000 jobs per monh, down rom 196,000 jobs per monh in he preceding ve monhs.Privae-secor job growh is urher ose by job losses in sae and local governmens, where eachers, bus drivers, reghers, andpolice ocers, among ohers, are being le go,reecing governmens’ budge roubles. A oal o 437,000 sae and local governmen jobs were los beween February 2010 andSepember 2011.
2
Privae-secor job growhis oo weak o improve he economic orunes o America’s middle class, making jobs policymakers’ op prioriy.
•
Unemployment stays high amid weak job growth.
Te unemploymen raesood a 9.1 percen in Sepember 2011. Long-erm unemploymen ballooned ashe unemploymen rae sayed high. In Sepember 2011, 44.6 percen o he unem-ployed had been ou o work and looking or a job or more han six monhs. Teaverage lengh o unemploymen sayed close o a record high, wih 40.5 weeksin Augus 2011. Millions o unemployed sand o lose heir benes i Congressdoes no exend unemploymen insurance benes or he long-erm unemployed,comprising 6.2 million people in Sepember 2011,
3
a he end o 2011.
 
3Center or American Progress | Economic Snapshot or October 2011
•
Labor market pressures fall especially on communities of color, young work-ers, and those with little education.
Te Arican American unemploymen raein Sepember 2011 sayed well above average a 16 percen and he Hispanicunemploymen rae sayed high wih 11.3 percen, while he whie unemploy-men rae was 8 percen. Youh unemploymen sood a a high 24.6 percen. And he unemploymen rae or people wihou a high school diploma sayedhigh wih 14 percen, compared o 9.7 percen or hose wih a high schooldiploma, and 4.2 percen or hose wih a college degree.
4
Vulnerable groupshave sruggled disproporionaely more amid he weak labor marke o he pas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 labormarke suer remendously rom high and long-erm unemploymen.
•
Household incomes continue drop amid prolonged labor market weaknesses.
Median inaion-adjused household income—hal o all households have moreand 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 in 2010, an acceler-aed decline afer median income dropped by 0.7 percen in 2009. Americanamilies saw ew gains during he recovery beore he crisis hi in 2008 andexperienced no income gains during he curren economic recovery afer 2009.
5
•
Income inequality rises.
Households a he 95h percenile, wih incomes o $180,810 in 2010, had incomes ha were more han nine imes—9.04 imes,o be exac—he incomes o households a he 20h percenile, wih incomes o $20,000. Tis is he larges gap beween he op 5 percen and he botom 20 per-cen o households since he U.S. Census Bureau sared keeping record in 1967.
6
 
•
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 22percen. More han one-hird o Arican American children (39.1 percen) livedin povery in 2010, along wih 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.
•
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 he

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