Share on Google Plus Share on Twitter Share on Facebook 1 Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend 2 (3 Shares)  
Printer Friendly Page Save As Favorite View Favorites View Article Stats   5 comments

OpEdNews Op Eds

The Stall Has Arrived

By (about the author)     Permalink       (Page 1 of 1 pages)
Related Topic(s): ; ; ; ; ; ; , Add Tags Add to My Group(s)

Well Said 3   Supported 3   Valuable 3  
View Ratings | Rate It

opednews.com Headlined to H2 5/4/12

Become a Fan
  (104 fans)

stall

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 that's still abysmal relative to what's needed). We need well over 250,000 new jobs per month in order to begin to whittle down the vast number of jobs lost in the Great Recession. At least 125,000 new jobs are necessary each month just to keep up with an expanding population of working-age people.

With only 115,000 jobs in April, 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.

It's also 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. 

No set of policies between now and Election Day are likely to expand 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. In 2013, when spending major cuts are scheduled, we'll fall off a fiscal cliff.

Obama needs to push back loudly and clearly, saying he won't support additional spending cuts until the economy is showing clear signs of improvement.

But 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.

Yet 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. Obama and the Democrats have to explain to the American people why inequality isn't just unfair; it's also economically unsustainable.

 

http://robertreich.org/

Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact Author Contact Editor View Authors' Articles

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

The Republican's Big Lies About Jobs (And Why Obama Must Repudiate Them)

Paul Ryan Still Doesn't Get It

What Mitt Romney Really Represents

The Minimum Wage, Guns, Healthcare, and the Meaning of a Decent Society

Why the Right-Wing Bullies Will Hold The Nation Hostage Again and Again

The Gas Wars

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
5 people are discussing this page, with 5 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)
[[IMG339]]Robert, it was Clinton, the man you serv... by Dave Lindorff on Friday, May 4, 2012 at 5:19:08 PM
This, more than anything, was the beginning of the... by 911TRUTH on Saturday, May 5, 2012 at 10:58:37 AM
Promising "real change you can believe in", I had... by Lance Ciepiela on Saturday, May 5, 2012 at 1:15:44 PM
"Obama and the Democrats have to explain to the Am... by Jack Flanders on Sunday, May 6, 2012 at 10:00:36 AM
The problem of unemployment and the resulting po... by David Chester on Sunday, May 6, 2012 at 10:22:10 AM