As I feared, the economy has stalled.
Friday's jobs report for April was even more disappointing than March. Employers added only 115,000 new jobs, down from March's number (the Bureau of Labor Statistics revised the March number upward to 154,000, but it's still abysmal relative to what's needed). At least 125,000 new jobs are necessary each month just to keep up with an expanding population of working-age people.
That means the hole is getting even deeper.
Most observers pay attention to the official rate of unemployment, which edged down to 8.1 percent in April from 8.2 percent in March. That may sound like progress, but it's not. The unemployment rate dropped because more people dropped out of the labor force, too discouraged to look for work. The household survey, from which the rate is calculated, counts as "unemployed" only people who are actively looking for work. If you stop looking because the job scene looks hopeless for you, you're no longer counted.
In the winter months -- December, January, and February -- hiring had seemed to pick up, averaging over 250,000 new jobs per month. Then the mini-surge stopped. The simplest explanation is that the mild winter across much of the United States gave an unusual boost to hiring then, leading to a correction by the spring.
Most of the job gains in April were in lower-wage industries -- retail stores, restaurants, and temporary-help. That means average wages continue to drop, adjusted for inflation -- continuing their long-term decline. Most of the new jobs that have been added to the U.S. economy during this recovery have paid less than the jobs that were lost during the downturn.
What does all this mean? Together with other recent data showing slower economic growth during the first quarter of this year, it's safe to say the economy has stalled.
This is bad news for millions of Americans, and it's bad news for Obama and the Democrats. Voters don't pay much attention to the economy in an election year until after Labor Day, so it's not necessarily a huge help to Romney and the Republicans.
But it's a bad political omen nonetheless. That's because no set of policies between now and Election Day are likely to boost the economy. To the contrary, government at all levels continues to contract, acting as a fiscal drag when government needs to be doing the exact reverse -- boosting the economy through additional spending.
Widening inequality is the underlying culprit here. As long as almost all the gains from economic growth continue to go to the top, the vast middle class doesn't have the purchasing power to boost the economy on its own. And rich Americans spend a much smaller portion of their incomes than does the vast middle class. Their marginal satisfaction from additional spending falls off. The second yacht isn't nearly as much fun as the first.
Get it? We've still got a terrible cyclical problem -- we can't get out of the gravitational pull of the Great Recession.
But the underlying problem is structural, and it's been growing for decades. The structural problem of stagnant or declining real incomes for most people, and soaring income and wealth at the top, was masked during the boom years when the middle class could turn their homes into piggy banks and extract home-equity loans or refinance. But the mask came off in 2008 as home values plummeted.
There's no way to put the mask back on. We've got to face the truth.
ROBERT B. REICH, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
The banksters still have a 26T$ FED slush fund.
Finances still exceeds the total value of the GDP via SWAPS.
The slightest downturn in whatever they bankster are betting on with SWAPS,
will be leveraged to infinity and crash the economy again.
The question is: will the dupes blame Obama and the dems, who tried to fix the problems, of the the true criminals, the GOP/Tea who are out to destroy the republic, the Beast, our democracy and let the 1% plutocrats rule like they did before the revolution.
We still spend 54% of national taxes on war.
We still have the lowest taxes on the 1% since before the great depression.
Now we are seeing the results of the vaunted "service economy." No one told us what it really meant was asking customers "do you want fries with that?" at minimum wage.
The Tea Party and Occupy have at least one thing in common. We want everyone who sent jobs out of the country to bring them back--or else. Or else what? We will unelect the incumbents and vote in representatives who are responsive to their constituency not the political process.
Whatever else you may think about the Tea Party representatives, they are very careful to do precisely and exactly what their electorate sent them to Washington to accomplish.
The structural job losses we face are due to NAFTA and similar unequal trade policies. If you wish to point blame for that then it must be bi-partisan blame. A "R" Congress and a" D" President ( Clinton ) signed this piece of US job killing legislation.
Because certain countries and industries bought or bribed their way onto special privileges. I was in a business where, under NAFTA, my competitors could come to the US, buy their inventory, import it into Mexico and sell it , all tariff free. I could not buy those exact same products and important them into Mexico and then sell them without being heavily taxed at the border. I had to wholesale to a Mexican
Free trade my a*s**s. NAFTA was great for the multi national corporations, their executives and some US bureaucrats who negotiated the " free" trade treaty and then went to work for those they were negotiating against.
There were no protections for American workers and businesses to gradually adjust.
There was at the time, a third party candidate who warned against NAFTA. Ross Perot predicted a great " whooshing" sound as American jobs were sucked out of this country.
All the entrenched partisans and the corporate media, on both sides, called him crazy and ridiculed him. But we can all seen now, too late, he was spot on correct.
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Wrong - those coming of "working age" are offset by Boomers now retiring. We're called Boomers because there are more of us, and we are now retiring. The majority of those no longer looking for work are retired, but are still being counted. Including my sister and husband and many friends: laid off during the Crash, collecting unemployment and extensions with no intention of ever working again. There is no difference between "retired" and "unemployed" on the IRS form. Most will put down "unemployed" until age 65. They may make some money, but they have retired. All perfectly legal, and normal.
Only 40% of workers work until age 65, most are forcibly retired. My sister and husband were laid off, but many I know took early retirement but are considered unemployed. They collected unemployment and extensions, all perfectly legal.
An an economist by training and education, economic growth comes from the quantity of labor AND the quality (productivity) of labor. Other factors too obviously such a technological change, capital....
There is no way I can see our economy growing with a mere $125,000 jobs per month.
If a person is collecting unemployment, they are in the labor force. If they have retired and either are not working a second job or looking for a job, they are no longer in the labor force. Now if they want a job but have given up looking, they are "discouraged." Problem. Otherwise, it is not a problem.
Your sister and brother in law are considered unemployed because they are seeking work (per terms of collecting unemployment benefits).
Professionally, I am Retirement Planner. I can tell you most boomers have little retirement funds and still have lots of expenses. Most will still need the same level of income as pre-retirement, whether their retirement is voluntary or involuntary.
We have allowed a two-tiered economy to become a fact of life in America. How it pans out I have no clue. I have serious reservations.
My belief is that due to the reluctance of retirement age workers to leave the workplace completely due to lack of funds for retirement (baby boomers) and our worldwide global economy (where there are lower wages and socialized medicine - employers don't pay for insurance in places like India) the economy will continue with less job growth for the next 10 yrs or more.
The reason this plan has gotten as far as it has - and every Republican in Congress has voted for it and Romney has supported it - - is because the average american doesn't really have an understanding of what is being proposed.So to remedy this, I think the National Democratic Committee would be wise to put a name on these coupons and repeat it over and over until every american does understand what the GOP has in store for them.
My best name - and in fairness it is probably the name that will be chosen anyway - is MEDICARE FREEDOM VOUCHERS.
Every Dem politician should say it over and over so at least the lines can be clearly drawn. i.e., vote republican in Novemberer and MEDICARE FREEDOM VOUCERS ARE COMING.
( Might print of a facimile of what they will look like as well.)