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Economic Snapshot for November 2011

Economic Snapshot for November 2011

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The economy isn’t growing fast enough to bring down unemployment, writes Christian E. Weller. Policymakers need to step in with targeted measures.
The economy isn’t growing fast enough to bring down unemployment, writes Christian E. Weller. Policymakers need to step in with targeted measures.

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Published by: Center for American Progress on Nov 30, 2011
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1Center or American Progress | Economic Snapshot or November 2011
Economic Snapshot for November 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 ProgressNovember 2011
Te economy is growing bu ha growh remains oo weak o subsanially reducehe unemploymen rae. Millions o unemployed workers will have o wai oreiher he economy o gain some seam on is own or or policymakers o help heeconomy grow more quickly. Te ormer seems unlikely, especially since consum-ers are sill burdened by crushing debs. Consumpion spending will likely say subdued or some ime.So public policy mus ocus on wo shor-erm goals.Firs, policymakers need o srenghen he economy by increasing inrasrucurespending on schools, roads, and bridges, which creaes jobs, and by exending key middle-class ax cus, such as he emporary payroll ax cus, or an addiional year.Second, policymakers can help millions o unemployed workers who canno nda job by coninuing exended unemploymen insurance benes.1.
Economic growth remains low.
Gross domesic produc, or GDP, grew aan annual rae o 2 percen in he hird quarer o 2011. Business invesmenexpanded a a srong 14.8 percen in he hird quarer o 2011,
while exporgrowh sayed slow a 4.3 percen, consumpion grew only 2.3 percen, andgovernmen spending ell by 0.1 percen. Economic growh is relaively weak  because o weak consumer demand due o high unemploymen and a crush-ing deb burden o consumers. Bu is also ha way because o slow demandor U.S. expors in he wake o global economic urmoil, especially in Europe.
2Center or American Progress | Economic Snapshot or November 2011
Figure 1
Share of long-term unemployment, business cycle averages
The trade deicit stays high.
Te U.S. rade deci sood a 3.7 percen o GDPin he hird quarer o 2011, which is slighly below he 4 percen recorded inhe second quarer o 2011 bu sill subsanially up rom is las rough o 2.4percen o GDP in he second quarer o 2009.
U.S. expor growh, even wheni was srong in recen years, has no been enough o overcome even largerimpor increases, ollowing in par higher oil prices. Tis pus more pressureon oher pars o he economy—consumpion and business invesmen chie among hem—o generae aser economic growh and jobs.3.
The labor market recovery is slow.
Te privae secor coninuously added jobs rom February 2010 o Ocober 2011 or a oal o 2.8 million jobs. Buprivae-secor job growh slowed subsanially saring in May 2011 hroughOcober 2011. I averaged only 119,000 per monh during ha ime,down rom 196,000 jobs per monhin he preceding ve monhs. Privae-secor job growh is urher ose by  job losses in sae local governmens, where eachers, bus drivers, regh-ers, and police ocers, among ohers,are being le go, reecing govern-mens’ budge roubles. A oal o 435,000 sae and local governmen jobs were los beween February 2010 and Ocober 2011.
In sum,privae-secor job growh is oo weak o improve he economic orunes o  America’s middle class, making jobspolicymakers’ op prioriy.4.
Unemployment stays high amid weak  job growth.
Te unemploymen rae sood a 9 percen in Ocober 2011.Long-erm unemploymen ballooned as he unemploymen rae sayed high.In Ocober 2011 42.4 percen o he unemployed were ou o work and look-ing or a job or more han six monhs. Te average lengh o unemploymensayed close o a record high wih 39.4 weeks in Ocober 2011. Millions o unemployed (5.9 million in Ocober 2011)
sand o lose heir benes i Congress does no exend unemploymen insurance benes or he long-erm unemployed a he end o 2011.
Average weeks of unemploymentBusiness cycle start
Dec-48 Aug-53 Sep-57 May-60 Jan-70 Dec-73 Feb-80 Aug-90 Mar-01 Dec-07
3Center or American Progress | Economic Snapshot or November 2011
Labor market pressures all especially on communities o color, young work-ers, and those with little education.
Te Arican American unemploymenrae in Ocober 2011 sayed well above average wih a high 15.1 percen, andhe Hispanic unemploymen rae sayed high wih 11.4 percen, while he whie unemploymen rae was 8 percen. Youh unemploymen sood a a very high 24.1 percen. Te unemploymen rae or people wihou a highschool diploma sayed high wih 13.8 percen, compared o 9.6 percen orhose wih a high school diploma and 4.4 percen or hose wih a collegedegree.
Vulnerable groups sruggle 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 labor marke suer remendously rom highand long-erm unemploymen.6.
Household incomes continue to plummet amid prolonged labor marketweaknesses.
Median inaion-adjused household income—hal o all house-holds have more and he oher hal have less—sood a $49,445 in 2010, which is is lowes level in inaion-adjused dollars since 1996. I ell again by 2.3 percen in 2010, an accelera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 and experienced no income gains during he cur-ren economic recovery afer 2009.
Income inequality on the rise.
Households a he 95h percenile—incomeso $180,810 in 2010—made more han nine imes (9.04 imes o be exac)he incomes o households a he 20h percenile, who made $20,000. Tisis he larges gap beween he op 5 percen and he botom 20 percen o households since he U.S. Census Bureau sared keeping records in 1967.
Poverty continues to rise across a wide spectrum.
Te naion’s povery raerose o 15.1 percen in 2010—is highes rae since 1993. Te Arican Americanpovery rae was 27.4 percen, he Hispanic rae was 26.6 percen, and he whierae was 9.9 percen in 2010. Te povery rae or children under he age o 18sood a 22 percen. More han one-hird o Arican American children (39.1percen) lived in povery in 2010, compared o 35 percen o Hispanic childrenand 12.4 percen o whie children.
Tese saisics ell us ha he prolongedeconomic slump, ollowing an excepionally weak labor marke beore he crisis,has aken a massive oll on he mos vulnerable.

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