We're falling into a double-dip recession.
The Labor Department reports this morning that the private sector added a measly 41,000 net new jobs in May. But at least 100,000 new jobs are needed every month just to keep up with population growth.
In other words, the labor market continues to deteriorate.
The average length of unemployment continues to rise -- now up to 34.4 weeks (up from 33 weeks in April). That's another record.
More Americans are too discouraged to look for a job than last year at this time (1.1 million in May, an increase of 291,000 from a year earlier).
Of the small number of jobs created by the private sector in May, many came from temporary help services.
Which is one reason why the median wage continues to drop.
Why are we having such a hard time getting free of the Great Recession? Because consumers, who constitute 70 percent of the economy, don't have the dough. They can't any longer treat their homes as ATMs, as they did before the Great Recession.
Businesses won't rehire if there's not enough demand for their goods and services.
The only reason the economy isn't in a double-dip recession already is because of three temporary boosts: the federal stimulus (of which 75 percent has been spent), near-zero interest rates (which can't continue much longer without igniting speculative bubbles), and replacements (consumers have had to replace worn-out cars and appliances, and businesses had to replace worn-down inventories). Oh, and, yes, all those Census workers (who will be out on their ears in a month or so).
But all these boosts will end soon. Then we're in the dip.
Retail sales are already down.
So what's the answer? In the short term, more stimulus -- especially extended unemployment benefits and aid to state and local governments that are whacking schools and social services because they can't run deficits.
But the deficit crazies in the Senate, who can't seem to differentiate between short-term stimulus (necessary) and long-term debt (bad) last week shot it down.
In the longer term, we need a new New Deal that will bolster America's floundering middle class. Expand the Earned Income Tax Credit and extend it up through the middle class. Finance that extension through higher marginal income taxes on the wealthy, who have never had it so good.
This post originally appeared at RobertReich.org
Art Cashin: Jobs Report Increases Double-Dip Risk
Europe Woes Unlikely To Cause Global Double-Dip: Saudi Central Bank Gov
Is Housing Already Double Dipping
1. All money that our Government spends comes from the private sector.
2. Annually the USA spends more money than it takes in as an unwritten modus operandi or M.O. Both political parties are guilty of it. Yet they exonerate that behavior by pointing to their opposition as cause, as if that provides the necessary dispensation for their complicit behavior. In media parlance it’s peddled to the unwashed masses matter-of-factly as a deficit.
3. Given our Government M.O., the deficit requires a loan for payment. Since each year we spend everything we take in and more, the deficits add to an ever growing DEBT. To which the media doesn’t assign enough attention.
4. When our country’s debt exceeds our ability to repay, we will “hit” the same “wall” as Greece and the European Union.
5. We MUST CHANGE the modus operandi if we are to manage the debt. It matters not who wins the Miller lite-esque debate over less spending/more taxes; we have got to make buying down our debt part of the budgetary process.
Mr. Reich is and educated fool who is recommending we throw water to a drowning man. We are on a forced march to third world poverty where the USA along all other “endless spenders” on government entitlements and military incursions will have to obey those who hold our debt, namely China. They will dictate the new world order. Learn to speak mandarin
2009, and President Barack Obama inherited 2 wars, 3 trillion deficit, and unemployment rising like baking bread. The wealthy stashing their cash into offshore accounts to evade taxes. 8 months earlier, W says he is going to leave his 2 wars and the failing economy to the next president??? In those 8 months of non-response, unemployment and the economy CRASHED; he was just waiting to blame Obama.
Just open those offshore accounts, have an accounting firm review them for back taxes with compound interest, there's plenty of money to pay off the deficit, health care, universal pre-school, stop this nonsense of cutting disability for those with mental retardation or mental illness.
Give half of this country to you haves, half to the have nots; let the haves take care of themselves, let the have nots take care of themselves. In spite of the unjust original prosperity see who survives.
Businesses will not rehire in an environment of uncertainty. And that is the enviroment that the current regime has established. (health care, cap & tax, stimulous, etc.).
Be assured there is a stong underlying demand for goods and services. However the public, has been robbed by the endless taxation and confiscation of wealth. The continuous micro management by politicians has severly damaged the ability of the free market economy to prosper.
Our nation grew to be the greatest nation in the world because we allowed citizens to be responsible for their own actions.
We are at a serious crossroads. If we follow your road, we are garenteed continued high unemployment, continued huge deficit spending, and a breakdown of those virtues in our society that have made America great.
If we follow the historical precedents laid out in periods of economic prosperity, we will see that the way you stimulate the economy is to give the people back their money.
Mr. Reich, to give you some credit for your above conclusion that we are going into a double dip recession, we will certainly do so if the regime follows your suggestions. Your desire to have everyone equal severly clouds your abilty to see the economic truths.
Paco
" Pure labor has always been the handmaiden to capital... "
but if pure labour rejected this arrangement, wholesale - ?
then what?
the development of some sort of parallel system seems possible, and actually in the interest of those who are not only not advantaged by the current system, but are being destroyed by it
instead of fighting to change that which is petrified in its resistance by its own greed and inertia, why not start up a "start up" monetary system to run alongside (and eventually, one hopes, overtake) the ancien regime?
looking at the gulf, have we much, if anything, to lose by trying?
As for a start up parallel, it would be great, except the mindset of voting against one's own interest must be smashed.
There's no return on investment when our government spends a trillion dollars to conduct endless wars. What we need is a combination of clean energy mandates (oil independence by 2020, anyone?), investment in education and technology, and sensible tax codes and regulatory practice.
Doing what works, works. Doing what doesn't work: doing it stronger, doing it longer, doing it harder, doing it better - STILL DOESN'T WORK!!!!
The Chinese Government, already in serious negotiations with 17 countries, also wants to build a third link through Burma, Thailand, Malaysia and Singapore. It claims the Herculean task could be completed in as little as a decade and has offered to cough up the money for the infrastructure – in return for cut-price raw materials, which it can transport cheaply back to its manufacturing centres.
In January, China opened what it billed as the fastest rail service in the world – a bullet train travelling at a top speed of 350km/h between the cities of Guangzhou and Wuhan, slicing the previous journey time from 10 hours to just three. Within three years China will have 800 bullet trains criss-crossing its territory, and it is already in the throes of building high-speed rail lines in Turkey, Saudi Arabia and Venezuela.
Wake UP American Politicians
John Hay
Australia
The solution is to build factories and infrastructure where unions will not hole companies hostage. This already has happened in the auto industry and now other business is waking up.
We are in a new era today and unions are no longer-supported by the majority of people. They have cause business to close, re locate and go out of business.
I believe in workers safety big time and proper environment to work in but the unions had managed to take the breath away in competing in a global market.
China had good aggressive businessmen and very cheap labor if we are going to compete and have a robust economy we must learn lesson from the past. America has many great ideas and visionaries but we also have daunting obstacles called unions when we need to execute.
They have all fled to China thanks to stores like Wal-Mart.
The current income tax system based on Title 26, the Internal Revenue Code, costs over US$300 BILLION per year in compliance costs thanks to its 70,000-plus page complexity, has driven over US$10 TRILLION in American-owned liquid assets out of the USA into foreign financial institutions beyond the reach of the IRS, and driven many millions of jobs out of the country. This, in my opinion, is sheer economic stupidity.
I'd like to a drastic overhaul of our income tax system (e.g., either much lower marginal tax rates but with very few deductions, Steve Forbes' flat tax proposal, or the even more radical (but very commonsense) "FairTax" national consumption tax replacement for the income tax). In short, we should _reward_ the process of _earning_ money, not punish the process. Such a change means little to no incentive to participate in the "underground economy" or funnel assets to financial institutions beyond US borders (care to explain all those "banks" at various Caribbean nations?), and that could mean saving Americans over US$300 billion per year in compliance costs and bringing back most of that over US$10 trillion in liquid assets--in effect, the world's largest "private bailout."
Eternal growth isn't possible.
What are the limits to growth?
Maybe we're there.
you might find the information at this link interesting
http://www.ratical.org/many_worlds/cc/CC.html
demurrage currency does not require endless growth for prosperity
successful application, worgl, austria: scroll down on the site to "the 1930s in germany"
money, as a human construct, can be refashioned/redesigned with new assigned properties, the better to support and encourage homeostasis, stability and promotion of health and natural resources
more than one currency can operate at the same time in a single economy, so-called "comlementary currency" such as fureai kippu, in japan, or grain de sel in france
http://en.wikipedia.org/wiki/Fureai_kippu
we just don't put redesigning money seriously on the table becos there is this tendency to think that money, in its current form, is a "given" (came down on clay tablets or the like, lol)
the federal reserve only dates to 1913 but people treat it as if it had been born with the pyramids
odd, that, really