The Great Recession: It Ain't Over Til It's Over

The world economy is growing; stock markets are up; talk of recovery, not world depression, fills the business pages. As the leaders of the 20 leading economies gather in Pittsburgh this week, they might well feel the euphoria of someone who has survived a near death experience. (For an insightful report on Pittsburgh and the G-20, go here)

Well hold the champagne. Don't declare victory while the enemy is still advancing. Bush's calamitous folly in Afghanistan -- celebrating victory and invading Iraq while the Taliban and al Qaeda were regrouping in the mountains -- should have taught us that much. Let's not go Bush on the economy.

The question is one of jobs. The reality is companies are still shedding workers; unemployment is still rising. There is no recovery until jobs are being generated. Before the leaders deal with what comes after the recovery, they better secure it. Pittsburgh should be first and foremost a summit on jobs.

The leaders of the labor union federations from the twenty countries, led by the AFL-CIO, call the leaders to sober up in their "Pittsburgh Declaration." Unemployment is high and rising. It is slated, they report, to almost double over the next 18 months in the industrial countries, and continue rising with rates over 10% well into 2011. Over 200 million workers worldwide could be pushed into extreme poverty.

In the U.S., one in six workers is unemployed or underemployed. Companies are shedding jobs, not hiring. Young workers are hurt the most. Even recent college graduates struggle, with 80% of new college graduates, the boomerang generation, moving back in with their parents. Long-term unemployment is at record rates. Unemployment is the worst in a quarter century and rising.

High unemployment is accompanied by stagnant wages and benefits, and cutbacks in hours. This comes after a lost decade in which most families lost ground. Hard pressed families have no choice but to tighten belts. Declining consumption means more layoffs. Declining incomes mean falling revenues for governments. State and local governments, having burned through their rainy day funds, are now laying off teachers and police.

The unprecedented intervention of the Federal Reserve to bail out the banks -- interest rates near zero, purchasing over a trillion in mortgage backed securities, and much more -- and the Obama recovery plan, providing aid to states and localities, bolstering low wage workers, and beginning to generate jobs from public works programs -- have managed to staunch the hemorrhaging, at least temporarily. Unprecedented in scope, they aren't yet enough to generate a recovery.

The union leaders get it right. The recovery plans to date "are inadequate in size" and "do not sufficiently focus on employment." They urge the leaders of the G-20 not to exit from their stimulus measures prematurely. Instead they argue for another round of job focused spending, targeted on putting people to work, and sustained until the recovery is clear.

This is heresy in this country. Our know-nothing right dismisses the recovery plan as a failure, when it is in fact what is holding up the economy. The business community and conservative economists are railing about debt, calling for cutting back the current spending plans. They fret more about the potential of future inflation than the reality of right-now misery, and the clear and present danger of continued stagnation. The big banks are gamboling back into leveraged speculation and million dollar bonuses, and fending off efforts to shut down their casino.

Obama must stand firm against this tide. The president should make it clear to the leaders in Pittsburgh that the measure of a recovery is that people are back at work, and that wages are rising once more. He should challenge them to focus on jobs, pushing for another round of coordinated recovery plans to put people to work. Hold off on the party. There is no recovery without jobs. And no victory while unemployment is rising.

 

 

Comments

[themodernleader]

OB-GYN. You are correct about health and unemployment, but only in a declining organization. In the 1930's we were suffering economic collapse but the overall health of Americans was far superior to their health today. Of course, they did not live as long because the miracle drugs beginning with sulfa drugs had not been discovered. But barring bacterial infections, Americans were a growing and developing people.
Not now. Our people, for many reasons, are declining in their capaciity to perfom in the work place, carry our strenuous activity, concentrate on one function for extended periods of time. This is one of the axioms of the Unified Theory of Leadership that derived form my empirical and historical research on leadership. In a declining organization the mental and physical health of the membership deteriorates over a period of time.

[adoseofsanity]

Economics dictate that the economy is in recovery when there are two successive quarters of GDP growth. Although there are some analysis that is more detailed, the bottom line still is what is happening to GDP.

Job growth will occurr when: it is needed, and employers (this would be companies large and small) are convinced that the demand for their goods or services will be growing causing the need for additional staffing. And, in most cases, the increasing demand for goods and services will have to come from the private sector, not the government. And there is always a lag in employment growth when coming out of a recession.

As there have not been two successive quarters of GDP growth, we are not in an economic recovery. And, as I have clearly shown, I am clearly a part of the know-nothing right that does dismisses the recovery plan as a failure but, is admittedly incapable of articulating this in a way that most here will be able to understand.

[dinofreeno]

As someone who works in the Human Services field I can unequivocally attest to the fact that this recession is not over, and it is no where near over. Until people begin working again and wages rise as opposed to staying stagnant, the recession will linger. People have to work; people want to work. One thing I've always thought is that companies that outsource jobs should be taxed heavily, instead of continually taxing the general population over and over again.

[twohands]

There is no real economy without real jobs. It is very simple.

[DinkSinger]

Rising wages are not a good indicator of economic health. Wages have been rising throughout the recession. That is because low-wage workers are disproportionately affected by layoffs.

As to the need for continued stimulus, one of the big early complaints about ARRA was that its funds were reaching the economy too slowly, but this may be one of its strengths. So far only $98 billion has been paid out. There is another $140 billion that is immediately available, and much more to come. In the coming months the release of ARRA funds should rapidly expand and stimulus spending will continue for years. One of the more extreme examples is the $2.5 billion dollar rural broadband program. The CBO estimate is 60% of this money will not be spent until FY 2012 and beyond.

[therealredstateblues]

lower and middle incomes are disproportionateluy affected

as well as the obscene wages at the top skew the averages

[ClarcKing]

This is a good article. Any measurement of the economy that omits the homes foreclosed, one million children left homeless, millions underemplo­yed/unempl­oyed, outsourced jobs and industry, forced trade, perpetual war, bailouts in the trillions, market forces, cut backs in medical services, every State in the Union bankrupt is a criminal sophistry. Usury and speculation in every financial transaction is a deadly devise that redistributes the gain/value of labor and production; ultimately creating a contraction of production and economic activity; It is not sustainable. Confrontation of the monetary financial derivative debt based global economic engine that has accelerated the collapse of our nation is the imperative. The international monetary financier system must be terminated. If the United States does not implement economy formation measures, the U.S. economy will stop functioning. Put the Fed into bankruptcy protection, recover the bailout trillions, banks that qualify will join the U.S. National Bank. Create the population's absolute priorities: Credits and currency will be issued into the population's physical economy; for the perpetuation and improvement of the productive facilities on which the conditions of life depend. Only the United States can confront the International Monetary Financier Power; will lead and cooperate with other nations to reorganize the world financial/economic system. www.larouchepac.com

[zjr909]

So far as I can tell, this "recovery" is coming along just the way it was intended to. It was never conceived as a jobs recovery, only as a money moving upward recovery. I don't know why there are people who still don't get it. The "recovery" will not stop until all the workers of the industrial world are forced to accept massive reductions in pay, accompanied by virtually no benefits of any kind, and absolutely no social safety nets. Then, and only then, will the recession/recovery paradigm have succeeded in attaining its goals. The rich get richer, so somebody has to get poorer. Gee, wonder who that might be?

[themodernleader]

The Chief Executive is no better then the subordinate line administrators and Cabinet members selected to develop policy and run the behometh departments. President Obama has totally failed in selecting the same bunch that ran our economic system into tht ground. And he is relying upon them to bail out our economy while creating policy and procedure for this depression never to happen again.
Of course, their first colosal blunder was to transfer our remaining wealth to the corrupt bankers. Their bail out did not includ the burgeoning pool of unemployed Americans. There was no thought of rebuilding productivity. It simply kept the local governments from goig bankrupt temporarily.
Until Obama cleans house of inadequate and faithless subordinates, he will be in deep and deeper trouble. He better wake up.

[dobberdoss]

Correct me if I'm wrong but before this Recession was officially called a "recession" the world expert economists made it quite clear to all that you must have 2 successive quarters of negative GDP before calling it "recession". Correct?

So why are we now hearing that the "recession is over" based on still negative figures in the US or stagnant figures the world over? Could it be 'wishful thinking' and a 'con job' via the government through the 'puppet' media?

[DinkSinger]

A big problem with recession definitions is that their is a considerable lag in proving a recession has started of ended. The "2 successive quarters of negative GDP" growth is a popular definition of recession but is too simplistic in the view of most economists. Under this definition, a recession is underway for at least seven months before it is official.

In the United States a private, non-profit research organization called the "National Bureau of Economic Research", is the generally accepted authority in calling the turns in the business cycle. They define a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." Using this multi-factor definition, the NBER has determined that the current recession began in December, 2007. The first two consecutive quarters of decline in GDP were the third and fourth quarters of 2008. It took the NBER almost a year to determine we were in a recession, but pretty much everyone knew the economy was seriously weakening. That is why the Bush administration pushed for tax rebates in early 2008, before the recession was "official".

Similarly many Americans are beginning to feel things are turning around. The Conference Board Consumer Expectations Index is almost back to where it was in December 2007, when the recession began.

[dobberdoss]

Thanks for the Info

[therealredstateblues]

and isn't a prolonged period of contraction 6 quarters or more referred to as a depression?

why are we calling it what it is?

[DinkSinger]

Until after the Great Depression of the 1930s, all economic downturns were called depressions. The term recession was introduced to help convince the public that subsequent downturns were not the same. While there is no commonly accepted definition for a depression, one suggested definition is a decline in real GDP of at least 10% or a downturn that lasts at least three years. The decline in real GDP from its peak in the 2nd quarter 2008, through the 2nd quarter 2009, has been 3.9%.

Other economists suggest that the term depression should be used for a downturn following the bursting of an asset and credit bubble that is accompanied by a contraction in credit and declines in general price levels. While the current downturn certainly meets the first two parts of the definition, so far the decline in prices has been quite limited. While consumer and producer prices indexes have declined somewhat other prices, especially wages, have not.

[Philclock]

Jobs, absolutely!

Make that REAL jobs, not "stimulus" handouts.

Devil's in the details...­sooner Feds get out of the way and allow financial markets to get back to work, so will we.

[Stockbroker38]

As a handsome 38-year-old stockbroker, I agree with this statement. Just because Wall Street securitized obviously worthless mortgages based on shoddy loans and sold them to pension funds ect. with the knowledge that they would implode and force a government-funded bailout to make guys like me rich does not mean Wall Street is bad. Please government, do not regulate Wall Street. I'm a testament to how well things are going for hedge fund managers and other Wall Street legends.

[Alan Wendt]

We'll know the recovery is real when no banker has to worry about losing his fifth trophy home.

[PhantomBeast]

Without a doubt, the sooner we wealthy are not taxed AT ALL, the sooner will will send that
money trickling down to the little people.
We are here to start the economy to recover, not by being Taxed BUT by rewarding our richness
and social standing success in our estates and wealth holdings.
For Example, My 4 Estate Homes in Scarsdale, New York, will need all new designer French renaissance period, double thermal pane handhewn and crafted windows and portal entrance doorway systems. The present Period design Window and Door Systems are now 3 years old
and my personal architect has advised me to change the period motiff essence look.
So!!! I will have crews of skilled craftsmen, personal architect appointed, to give my estates their
new period appearance!!
That money Will FLOW from my estate wealth accounts, write off tax advantage of course, and eventually will be flowing into the eagerly waiting hands of the little people.
We wealthy know how to handle the tax advantages rightly given to us!! AND we are creating jobs,
if only temporarily at worker/laborer level $7.00p/hou­r, BUT the 38% taxes they pay on their weekly $280.00 salary will go toward my tax deferral wealth estate accounts AND arouse me to have
more Estate Renovations done!!...W­e feed each other, Well We Wealthy feed more on the worker/laborers then the otherway around.
That national works and jobs for our country's infrastructure is a bunch of baloney!!!

[DinkSinger]

In his Cross of Gold speech to the 1896 Democratic National Convention, William Jennings Bryan said:

"There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it."

I have always thought that "leak through" is much more eloquent than "trickle down".

[Spiriteddona]

blogger, spirited dona, loves, worships your title! for two years my mom and i struggle with things, that used to be simple-- groceries! mancession? womancession? cession!

[Stockbroker38]

As a handsome 38-year-old stockbroker, I want to know that I'm doing well. Thank you bailouts.

[jumperpin]

The U.S. working class never "recovered" from the '01 recession.

This next "recovery" will also bypass most managers and professionals.

[Stockbroker38]

As a handsome 38-year-old stockbroker, I don't think it will pass me by. I'm kind of disheartened when I hear all the negative talk about the recession when the top 1 percent -- including me -- is doing so well. Let's focus on the positive.

[DinkSinger]

I would say we lost much more in the 1990 - '91 recession. For example, most white collar workers here in New England had their base work week increased from 35 (or 37.5) to 40 hours. Going from 35 hours to 40 is a 14.3% hourly pay cut. In addition, the expectation that "exempt" workers would work far beyond the nominal 40 hours became much more common.

[OB-GYN]

Lack of jobs = personal and social stress= unhealthy Americans = greater medical expenditure at higher costs.

It's simple Sherlock.

[mspye]

While I do agree that we cannot declare complete recovery until people are back to work, I have to comment on what I see as a mindset of fear amongst some business owners and the gainfully employed that is hobbling our economy.

My boss is absolutely terrified of spending a dime right now even though our revenue has only decreased slightly. I am busier than ever with our clients and new business!

The same can be said of those who are employed. Many stay home because they're terrified of the recession but the only way we can rebound is if those with a steady paycheck use some of it to stimulate the economy the old fashioned way. By consuming. I'm not proposing that we go back to pre-recession level of consumption but let's not cut off our nose to spite our face.

I have no problem with reports of the recession ending even if it does turn out to be premature. We need good news to generate hope and faith in recovery so that those lucky enough to still have jobs feel secure enough to spend a little of that take home pay and help create jobs for others. Business owners need to have that same faith so that they start hiring again.

[rfshunt]

You make a very important point, Mr. Borosage.

A jobless recovery is like a foodless dinner.