The Recovery: Can You Feel It Yet?
We all know that the economy is now recovering. The stock market is up by more than 50 percent from its March lows and Alan Greenspan, the former Maestro, is now projecting a 3.0 percent growth rate for the third quarter. Banks are again reporting strong profits and the Wall Street bankers are getting bonuses that are approaching their housing bubble peaks.
Everything is bright and sunny again, unless you have to work for a living. The news here is less good. The economy lost more than 260,000 jobs in September, with the unemployment rate reaching 9.8 percent. The 10.3 percent unemployment rate for adult men is the highest rate since the Great Depression. And real wages are headed downward.
Even worse, the unemployment rate is virtually certain to keep rising in the months ahead. While job loss in manufacturing has slowed, construction is continuing to shed jobs at a rapid rate. Most of this job loss now stems from the collapse of the bubble in nonresidential construction. The retail sector is laying off workers at a rapid pace as consumers cut back spending in response to the loss of $8 trillion in housing bubble wealth. And state and local governments are now laying off teachers, firefighters, and other workers in response to the huge deficits created by the recession and the collapse of the loss of property tax revenue due to the collapse of the housing bubble.
While tens of millions of workers are facing unemployment or underemployment, and millions are facing the prospect of losing their homes, the instinct among the Washington punditry is to just sit back and wait. After all, now that the banks are all right they don't see any urgency for government action.
There are certainly many people who believe that the only role of government is to support bankers and other wealthy people who could not get by on their own. But for those who think that the government has the responsibility to prevent large segments of the population from being mired in unemployment, homelessness and poverty, there is much that can be done.
First, we should be clear, the stimulus passed last February did work. Go ask your governor or mayor how many more people they would be laying off right now had it not been for the federal aid provided by the stimulus. Also, millions of unemployed workers are seeing bigger unemployment insurance benefits (including health care coverage) because of the stimulus. Extended and increased benefits not only help these workers, but when they spend this money, it helps boost the economy. The same is true of the tax cuts directed toward ordinary workers that were included in the stimulus package.
The stimulus package has likely kept the economy from losing one million more jobs by this point. If the prospect of 10 percent unemployment sounds bad, let's start talking about 11 to 12 percent unemployment. That is where we would be going if Congress did not pass the stimulus package.
But the key point is that we desperately need more. It is not fair that tens of millions of people should suffer because Alan Greenspan and Ben Bernanke were too dumb to see an $8 trillion housing bubble.
There are many ways that the federal government can boost demand, with more aid to state and local government probably topping the list in terms of priorities. However, to get large numbers of workers back to work quickly, the best route is a tax credit to shorten normal working time.
The basic logic is very simple; the tax credit effectively pays employers to hire more workers, with each worker putting in fewer hours. If we used the tax credit to pay employers of 100 million workers to work 5 percent fewer hours, while keeping their take-home pay unchanged, then in principle they should want to hire 5 percent more workers, or five million workers. This can be done quickly and will involve more employment in the private sector, not make work public sector jobs. That should make the conservatives happy.
There undoubtedly will be some gaming of such a tax credit, but there is some waste/fraud in everything we do. The prospect of having 15 million people unemployed for much of the next two years is unacceptable. Having used trillions of dollars in loans to bail out the richest people in the country, it is time that the government take some bold steps to help everyone else.
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http://www.huffingtonpost.com/joseph-a-palermo/wall-street-is-more-of-a_b_327497.html
Can I feel it yet? Lemme check...
...feeling...feeling...feeling...
nope. can't feel it yet.
what does it say about the US economy if almost $1 trillion was needed just to prevent the loss of another million jobs? Our entire country is experiencing systemic failure, and our clueless elected officials in Washington do nothing but throw more good money after bad, instead of making the regulators do their jobs and stop the fraudulent looting of taxpayer money.
Can't say as I see much recovery even on the horizion yet. I'm still looking for ways to cut expenses just like I've done the last 2 years. You're wishfull thinking does not make it so even if you are a liberal.
Those of us who are currently working are working the same amount of hours but for less money. In addition we are trying to give the appearance of "being busy" least we end up without a job too. To cut our hours would be great. But to think that more people would be hired to do work which just isn't there is kind of a fallacy. What we need: Workers who haven't lost wages should quit spending as if every dime is their last. When demand for product and services increase, the economy hopefully will be helped as well as your fellow American.
One small change... it won't be "15 million unemployed over the next two years"... it will likely be double that... as it is a steam roller that continues to grow every month - in ever widening circles..not a straight line. You get laid off... so you don't take shirts to the cleaners anymore, you don't buy dinner's out, you don't go to the movies, you don't get your car washed at the gas station, you don't take mini stress reduction vacations - so the hotels and motels don't get your business either, the steam roller of Depression rolls in an expanding wedge outwards.... so it will likely be 20, 25, 30, 35 million American's out of work ... and that will collapse the Economy...
But you know... the Republicans don't care... they ARE Big Business... and all they care about is how much they can rake in and keep for themselves... they don't care that we are starving, that we are living on the edge of despair... they have socked away our Bailout Funds and used them to buy Porterhouse Steak while we get stuck with Spam... time to do something about it... vote your conscience, not your Party.
There is no current or historical data to support your assumption that the 15 million unemployed will double or even rise another full percentile other than the contageous component of hysteria.
In 1980 when Reagan took office we were in a recession that ended in 1982, however, unemployment continued to rise to 10.4 until 1983 when it peaked and began to recede. In 1985, unemployed, however, remained over 7%. We have been losing jobs since December, 2007 and believing that when unemployment peaks that job growth will rebound robustly is probably overly optimistic, but we are expecting unemployement to peak shortly after the first of the year and to experience job growth by the second quarter, It is too early too judge the accuracy of the expectation as we will have to have 2 quarters of positive GDP before the recession is officailly over. Doomsday prediction and hysteria change nothing and are counterproductive. Since the author knows that the WH is currently looking into the possibility of tax rebates for employers to add employees, he certainly is the orginator of the experimental solution.
Not enough money worth of fiscal stimulus has been spent to save a million jobs. I do like, however, how Dean Baker brings up weakness in nonresidential construction. There should have been more money in the stimulus allocated toward infrastructure projects for this reason. Nonresidential just peaked last year September and has two+ years of heading straight down (meaning far more job loss). About the govt paying employers 5% to hire 5% more workers, the idea is ridiculous. First, half of workers that have become unemployed in the last two years were let go by small business, and small businesses don't have many employees ; many have less than five. Second, many businesses are letting workers go because they have nothing for them to do, so hiring more is pointless. Many employers are still looking at cutting workers, as evidenced by negative ISM employment numbers. Four, new employees come with high costs as mentioned by another poster below. They have to be trained. They may need insurance. You need space and equipment for them (added IT costs), there are paycheck processing fees, company cell-phones, 401k plans, etc. Last, the average workweek is already at historical lows, so why would it make sense to decrease them even further?
http://www.economagic.com/em-cgi/data.exe/blsce/ces0500000007
http://www.economagic.com/em-cgi/data.exe/blsce/ces2000000007
http://www.economagic.com/em-cgi/find.exe/form
Boycot CHEVRON
What? Did I read this right? Did you say there's a recovery going on? Why didn't someone tell me? Can I join in...?Pleaaase
Out here in California the BLS U6 unemployment was at 22%. That's depression unemployment and if anything it has to have worsened. Not only that, the recovery will not be “V" shaped as everyone has hoped for, it's far more likely to be "W" shaped. That means there will be another crash before the economy rebounds and perhaps even a series of them. This isn't likely to be over before multimillionaires find themselves sleeping on park benches. Then, of course, when the real recovery comes, we can forget the lessons we might have learned from this and go back to dancing in the streets; as always on someone else’s dime.
"This isn't likely to be over until multimillionaires find themselves sleeping on park benches"... move over... that's MY bench you're sleeping on... go find your own... maybe one you voted against for the homeless --maybe one you felt would "cheapen" your property values if it were in a park anywhere near a decent community area, maybe one that you felt didn't need a covering at night, or a tent, because it would be "unsightly"... no, you can't have any of my bench afterall.... I've changed my mind...
Thanks, I couldn't stop laughing even though it's not a laughing matter? What great sarcasm!
I live in Detroit, Michigan where the "real" unemployment rate is expected to be over 30%; Michigan was in Recession when the rest of the country was booming. If this is "recovery," I would hate to see "depression." And out here a lot of people who voted/worked for Obama and the Democrats are saying it's time for a change, since a Democratic Congress and President cannot delivery on jobs and health care.
I agree. We need a third party. Obama has not delivered on promises to the millions of middle and lower income Americans who put him into office. Where is the CHANGE?
The Democrats can do any darn thing they want, just like the Rpubs did when Bush was in charge, and what are they doing? Nothing. Even worse, some of them (Obama too?) have been selling us out!
Well don't let anybody know that I told you so, this is no recovery! I haven't heard anyone talk about "green shoots" for sometime now. This "recession" promises to become very gruesome before it's over. Wish you well.
In my area we have more people on food stamps and kids on free lunch than ever before. Loans aren't going out and workers aren't returning to work. So just how is all that stimulus money helping?
It is helping in some ways. I work in Human Resources and we have several people who are working here that are being paid with Stimulus funds, including their benefits. Road projects in every state received millions of needed dollars. Stimulus funds will also pick up 67% of the cost of COBRA insurance, unfortunately most people who are unemployed can't even afford the other 33%.
Yes, but a lot of states are laying off or reducing workers' hours, cutting programs for the sick/ disabled/ poor, and dropping construction/ upgrades/ remodeling. Therefore, the ARRA Stimulus was not (and will not be) nearly enough to stem the tide of unemployment. That's why a SECOND Stimulus is sorely needed.
Painfully obvious that this writer has never actually run a business (yes, I checked his bio and there is no mention of actual business experience). The concept is great but oh my how naive. So he suggests I tell my employees that they are all getting a 5% pay cut so that I can hire inexperienced and perhaps untrained unemployed folks to do part of their jobs. If you are lucky enough to have a job and are struggling to get by, how ould you like that? By the way, who will pay to train these new employees? How about health benefits (there is a fixed cost you know)? How about the payroll tax effect (that starts anew for new employees)? How about vacation, etc,etc,etc. I know the answer - it should come out of my pocket, which is empty because of the economy ( but hey, aren't all business owners wealthy fat cats who hoard vast stores of wealth?) I would rather give up 5% of what I make (yes - I already have done that) to help start new businesses that employee people in a meaningful way.
Painfully obvious that you didn't read this paragraph, Doug:
The basic logic is very simple; the tax credit effectively pays employers to hire more workers, with each worker putting in fewer hours. If we used the +tax credit+ to pay employers of 100 million workers to +work 5 percent fewer hours, while keeping their take-home pay unchanged,+ then in principle they should want to hire 5 percent more workers, or five million workers. This can be done quickly and will involve more employment in the private sector, not make work public sector jobs. That should make the conservatives happy.
Emphasis added.
Sorry, but a tax credit is not real, upfront money.
Economics is a creation of nature. Unnatural modifications will not save it. The only thing that will save it is for the government to stop propping up the waning economy and for the citizenry to tighten its proverbial belts for the lean years to come. It will not be fun but it beats the alternative, which is an financial collapse that will make the great depression look like an economic hangnail.
Did you say ..inexperienced? There are plenty of experienced workers out here...ready and willing to work for you... but if you are still using the outdated and highly discriminatory methods of age discrimination and how good our credit is... after Big Business sold you a bill of goods about how important they are to "good hiring practices"... don't expect me to buy any of your products...
Part 1 of 2
In actual fact my particular income is from the Internet.
We sell a membership software and almost went out
of business between May and August. To say we cut
costs to the bone would hardly state the case, but we
did a number of things:
+ Changed merchant processors, saving about $150
p/$5k a month;
+ Slashed the cost of our software 65%
+ We made it a rule to keep anything electrical turned
off, especially lights, and fined anyone $1 who used an
item and didn't uplug or turn it off afterward. If it was an
item with a "ready" light, we turned it off.
+ We all faxed at the same time. We all used the
copy machine at the same time, then uplugged
these.
+ All agreed to give up our health insurance policies
+ All agreed to work weekends promoting and selling
(so yes, 7 days a week work w/about a half day off to
be with family).
+ We put a timer on the water heater that only kept
the water hot for about 2 hours, then turned off until
the next day and tried to leave hot water for only really
important needs.
+ Nothing like coffee pots were left on, drink your
coffee and pot turned off at 10am.
+ We purchased a medium sized window unit and
closed off the entire rest of the office except one room
in which we put all our desks. We let the overhead
fan circulate the air and went through the summer in
about 78-degree surroundings, not very nice but
not the end of the world.
Part 2 of 2
This actually worked. We saved our small company
and the incomes of the roughly 15 families who would
have been without jobs had we gone under.
In late September we noticed a tiny green shoot of hope.
The 65% discounted price caught on. Word got around.
People began buying.
We think we're going to be able to add back our health
insurance in about December, so all we can do between
now and then is hope no one comes down with anything.
It hasn't been a very pleasant 5 months, but we saved
our little company. We encourage others to realize the
that half a glass can be a lot more than what it seems.
Thank you for that! In my book you guys are heroes. I hope your little company goes gang busters!
Innovation in response to adversity is what this nation was founded on. My hat is off to you. Unfortunately I work in a university research lab. I get looked at like I'm insane whenever I try to save the lab money. I'm always told that fast is better than cheap, which is utter nonsense considering we are not a commercial organization. The fact is that the professors want data before their next conference or publication. it's nauseating.
Economists like Robert Rubin (Clinton Administration) understand that the stock market is up because the Government has taken over the role of the consumer (temporarily?)
The stock market however is not a good indication of the economy especially when it is being fueled by government spending.
It is understandable that those currently in power want to put the “best spin” on the situation. That is what people in power do in regard to their own policies.
But it would be foolish of us to believe too much in it. It is probably going to be some time before we know whether or not we have turned an economic corner for the better.
One way to begin to understand that we are doing better is to realize that some one thing, some one force has stood up, challenged the continuing fleecing of Americans by that thin line of cream that now have most of the wealth, and put some halt to the vampirism of ordinary folk by the corporate world.
When we know with some satisfaction that when he bankers and loaners have been defanged, that when financial services industries can no longer boldly lie and boldly make up their own figures without any governmental regulation, and when they all can no longer let our veins by any hook or crook, that we will have turned the corner.
The problem is not some plan of economic genius to get the ball rolling, or the lack of any plan.
It is the corporation opus moderandi than continues to promise us nothing but pain and loss.
I am beginning to think that a continual look at washington, an ennuied expectation that some gaggle of senators is going to save any of us is a waste of time. It ought to be plain enough by this time that the Senate is a harem of hookers for the corporate world.
Obama is beginning to appear to be like a child emperor in Far Eastern history, wherein he is a prop who is being hollowed out by his own lack of power.
It is now time to turn the sights on the corporations.
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