290 Economy and realism
November 8, 2009 § Leave a comment
We’ve all heard the hype about the economy is getting better. the NYT this morning has the following well-meaning editorial with some sense of correction of the normal upbeat forecasts.
If you are looking for an economic recovery you can believe in, the October employment report is not for you.
After contracting for a year and a half, the economy grew in the quarter that ended in September, driven largely by federal stimulus. But government spending, as large and as necessary as it has been, has not been enough to revive hiring.
Unemployment surged from 9.8 percent in September to 10.2 percent last month, its highest level since 1983. At the same time, the economy lost 190,000 more jobs. That means employers have eliminated 7.3 million positions since the recession began in December 2007.
As dreadful as they are, the headline numbers understate the severity of the problem. They also obscure an even grimmer fact: Unless there is more government support, it will take several years of robust economic growth — by no means a sure thing — to recoup the jobs that have been lost.
The unemployment rate includes only jobless people who have looked for work in the past four weeks. The underemployment rate — which also includes jobless workers who have not recently looked for work and part-timers who need full-time work — reached 17.5 percent in October. And the long-term unemployment rate — the share of the unemployed population out of work for more than six months — also continues to set records. It is now 35.6 percent.
The official job-loss data also fail to take note of 2.8 million additional jobs needed to absorb new workers who have joined the labor force during the recession. When those missing jobs are added to the official total, the economy comes up short by 10.1 million jobs.
Taken together, the numbers paint this stark picture: At no time in post-World War II America has it been more difficult to find a job, to plan for the future, or — for tens of millions of Americans — to merely get by.
At a recent meeting at the White House to discuss job creation, President Obama said that “bold, innovative action,” would be needed — from the administration, Congress and the private sector — to undo the devastation in the labor market. Americans are waiting for Mr. Obama to lead the way.
There were good ideas floated at the White House meeting, including bolstered federal support for efforts to retrofit and weatherize homes and public buildings. There was also talk of using government money to establishing a so-called infrastructure bank that would issue bonds to help finance big construction projects.
The country also needs a program that would create jobs for teenagers — ages 16 to 19 — whose unemployment rate is currently a record 27.6 percent. Deep and prolonged unemployment among the young is especially worrisome. It means they do not have a chance, and may never get the chance, to acquire needed skills, permanently hobbling their earnings potential.
We know that more stimulus spending and government programs are a fraught topic. But they are exactly what the country needs. It may be the only way to prevent a renewed downturn. And the only way to create the jobs needed to put Americans back to work. Those are the essential — and missing — ingredients of a sustained recovery.
The problem is the failure to understand the dynamics. The central part of our economy, banks and large ownership, have jettisoned costs, much of it wages, at the periphery, and so while total economic activity is down, the situation has been restructured so that upper class incomes are more or less where they were, with the difference being carried by those who lost jobs. If this picture is correct, there is no motive to go back to the old job picture except solid growth. But people are maxed out on consumptions of some kinds and are not coming back, and growth or even a steady state economy will not work with climate change needs.
SO the conclusion is, I conclude, that there is no recovery possible. What we need instead is a very wide ranging rethinking our economy, how people get incomes and the costs of things that are basic. A focus on local agriculture and new ways of housing – a new homesteading –. Hoping for a techno-green fix is hypocritical because the motive is to ride a new wave, to make money rather than make usefulness.