Depression Continues Despite Rosy Rhetoric
Posted by Michael A. Kamperman on March 6, 2011
The old saying is believe nothing of what you hear and half of what you see. The collapse of the American economy continues to unfold right before our eyes even as the spin doctors try to convinve us otherwise. For instance, take the recent 8.9% unemployment rate. The four numbers you need to know are 4, 5, 6, and 7. We have 4 million fewer people counted as wanting a job badly enough versus 4 years ago. Currently, 5% of the U.S. adult population has been dropped from the labor force versus 4 years ago. There are 6 million people (of those still officially counted) who have been out of work 6 months or longer. And sadly, 7 million fewer people have a job in America today than did 4 years ago. That’s any job, part-time or full-time, low-skill or low-wage. A hidden truth behind the numbers is we have lost more than 7 million good paying jobs with benefits and we have replaced some of those jobs with part-time, low-wage, low-skill jobs. Not exactly Morning in America. This despite the Fed printing money (though not enough) and the Stimulus funds still flowing out of Washington (though not enough). One long time measure of the health of the economy is Industrial Utilization. A measurement above 80% usage of exisiting facitlites is a sign of needed expansion of additional facilities. The economy has only recovered to a 76% utilization rate, which means we still have a ways to go before we need to add new net plant and equipment. Another measure of economic vitality is the health of the housing market. Sadly, this sick patient is on the verge of falling into a coma. The mortgage industry and the federal government have totally botched a decades old system of success. The White House response is to remove the federal government from 90% of a market it now controls and turn 90% of it over to the private sector. Has anyone in Washington figured out that in most instances the taxpayer and the home-owner are one and the same?
We are on the cusp of the second leg down of the New Great Depression. The stimulus that has propped up state and local governments ends this summer. We have already seen 330,000 state and local government workers lose their jobs with stimulus funds. The real cuts are coming this summer to a school district near you. The President should be ashamed to talk about how educating our kids is a bi-partisan shared priority. Shared by whom? The Republicans who want to cut $100 billion a year from federal spending for things like education, or the Democrats who are willing to meet them “half-way.” How about the President standing up and saying they will only cut one dime from education over his veto? If Ben Bernanke loses his back-bone and is unwilling to push QE3 in the face of two or more no votes on the Fed and screams from the Congressional Austerity Crowd, then the downdraft will be swift. If he stands tall in the saddle then it will be drip, drip, drip. At least in Wisconsin both sides have found a back-bone and hopefully wisdom will prevail and they will find common ground.
Where is the person in Washington who is willing to say we don’t have a spending problem, we have an unemployment problem. If we put the 7 million Americans back to work who have beend discarded, and we find jobs for the 4 million Americans who have graduated and shown up for work but found no room at the inn, then we flip from a country with 44 million people standing in bread lines called SNAP (food stamps) to a country with 11 million more tax-payers not needing federal help for food and a roof. America used to see itself as a beacon of light to the world. We used to see ourselves as the Greatest Nation on Earth. We viewed ourselves as a can-do people. Now, our leaders only talk about what we can’t do. They talk about our limits, not about our aspirations. We used to beleive the secret to success was growth and now we are being sold a bill of goods that says the secret to success is cuts. Where is our yearning for excellence? Where is our confidence that the next generation will be better off than we are? There are multiple ways to move our country forward and none of them include the concept of retreat preached by the Austerity Crowd.
