1 Center for American Progress | Economic Snapshot for 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, corporae profis are high, corporae cash holdings are soaring, and income gains are prolieraing among he rich. On he oher, job growh is meager, unemploymen says high, and America’s middle class sees he oundaion or a beter lie omorrow erode in a sea o deb. Botom line: Te economy is no working or millions o people who are looking or jobs and acing remendous economic uncerainy. Policy needs o ocus on creaing more and beter jobs quicker han has been he case in he economic expansion so ar. Tis can happen hrough necessary public invesmens ha can promply pu people back o work, as well as exended unem-ploymen benefis and lower payroll axes, or insance. Policymakers have an opporuniy o pu down key markers on ax and spending prioriies wih he work o he super commitee charged wih finding ways o rein in he long-erm budge deficis. Tis work will direcly impac he economic secu-riy o sruggling American amilies and he oulook or growh and uure living sandards or years o come.
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Economic growth remains low.
Gross domesic produc, or GDP, grew a an annual rae o 2.5 percen in he hird quarer o 2011. Te economy has expanded now by 5.6 percen in inflaion-adjused erms, he slowes growh during he firs nine quarers o an economic recovery since World War II. Business inves-men expanded a a srong 16.3 percen in he hird quarer o 2011, while expor growh remained subpar wih 4.0 percen, consumpion regained some srengh, expanding a 2.4 percen, bu only because personal saving ell precipiously. And governmen spending was fla. Economic growh is sill oo low o creae sufficien
2 Center for American Progress | Economic Snapshot for October 2011
FIGURE 1
Monthly job change since start of Great Recession
-1,000 -800 -600 -400 -200 0 200 400 600
Jobs (in thousands)
Jan ‘08 July ‘08 Jan ‘09 July ‘09 Jan ‘10 July ‘10 Jan ‘11 July ‘11
jobs o subsanially reduce he unemploymen rae. Low personal income growh is holding back consumer demand and fiscal roubles o governmens in he Unied Saes and abroad impede U.S. economic growh.
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The trade deficit stays high as imports outpace exports.
Te U.S. rade defici sood a 4 percen o GDP in he second quarer o 2011, up rom is las rough o 2.4 percen o GDP in he second quarer o 2009 and he larges defici since he end o 2008.
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Te solid U.S. expor perormance o he pas ew years has no been enough o overcome even larger impor increases, led in par by higher oil prices. Tis pus more pressure on oher pars o he economyconsumpion and busi-ness invesmen chie among hemo generae aser economic growh and jobs.
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The labor market recovery slows.
Te privae secor coninuously added jobs rom February 2010 o Sepember 2011 or a oal o 2.6 million jobs. And privae-secor growh slowed subsanially, rom May 2011 hrough Sepember 2011, averaging only 105,000 jobs per monh, down rom 196,000 jobs per monh in he preceding five monhs. Privae-secor job growh is urher offse by job losses in sae and local governmens, where eachers, bus drivers, firefighers, and police officers, among ohers, are being le go, reflecing governmens’ budge roubles. A oal o 437,000 sae and local governmen jobs were los beween February 2010 and Sepember 2011.
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Privae-secor job growh is oo weak o improve he economic orunes o America’s middle class, making jobs policymakers’ op prioriy.
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Unemployment stays high amid weak job growth.
Te unemploymen rae sood a 9.1 percen in Sepember 2011. Long-erm unemploymen ballooned as he unemploymen rae sayed high. In Sepember 2011, 44.6 percen o he unem-ployed had been ou o work and looking or a job or more han six monhs. Te average lengh o unemploymen sayed close o a record high, wih 40.5 weeks in Augus 2011. Millions o unemployed sand o lose heir benefis i Congress does no exend unemploymen insurance benefis or he long-erm unemployed, comprising 6.2 million people in Sepember 2011,
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a he end o 2011.
3 Center for American Progress | Economic Snapshot for October 2011
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Labor market pressures fall especially on communities of color, young work-ers, and those with little education.
Te Arican American unemploymen rae in Sepember 2011 sayed well above average a 16 percen and he Hispanic unemploymen rae sayed high wih 11.3 percen, while he whie unemploy-men rae was 8 percen. Youh unemploymen sood a a high 24.6 percen. And he unemploymen rae or people wihou a high school diploma sayed high wih 14 percen, compared o 9.7 percen or hose wih a high school diploma, and 4.2 percen or hose wih a college degree.
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Vulnerable groups have sruggled disproporionaely more amid he weak labor marke o he pas ew years han whie workers, older workers, and workers wih more educaion. Bu even hose groups ha are beter han heir counerpars in he weak labor marke suffer remendously rom high and long-erm unemploymen.
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Household incomes continue drop amid prolonged labor market weaknesses.
Median inflaion-adjused household incomehal o all households have more and he oher hal has lesssood a $49,445 in 2010, is lowes level in infla-ion-adjused dollars since 1996. I ell again by 2.3 percen in 2010, an acceler-aed decline afer median income dropped by 0.7 percen in 2009. American amilies saw ew gains during he recovery beore he crisis hi in 2008 and experienced no income gains during he curren economic recovery afer 2009.
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Income inequality rises.
Households a he 95h percenile, wih incomes o $180,810 in 2010, had incomes ha were more han nine imes9.04 imes, o be exache incomes o households a he 20h percenile, wih incomes o $20,000. Tis is he larges gap beween he op 5 percen and he botom 20 per-cen o households since he U.S. Census Bureau sared keeping record in 1967.
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Poverty continues to rise across a wide spectrum.
Te povery rae rose o 15.1 percen in 2010is highes rae since 1993. Te Arican American povery rae was 27.4 percen, he Hispanic rae was 26.6 percen, and he whie rae was 9.9 percen in 2010. Te povery rae or children under he age o 18 sood a 22 percen. More han one-hird o Arican American children (39.1 percen) lived in povery in 2010, along wih 35 percen o Hispanic children and 12.4 percen o whie children.
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Te prolonged economic slump, ollowing an excepionally weak labor marke beore he crisis, has aken a massive oll on he mos vulnerable.
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Employer-provided health insurance benefits continue to disappear.
Te share o people wih employer-provided healh 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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