America’s Sick Economy – by Stephen Lendman
Sooner or later the usual pundits and “experts” showing up on tout TV will buckle and admit what honest analysts have been saying all along:
America’s economy is sick and getting sicker. Since 2008, working households have struggled through the early stages of a protracted global depression, getting worse.
While corporate profits recovered, workers experienced growing poverty, homelessness, hunger, and high unemployment.
At the same time, barely more than crumbs were offered for help. Now ended, austerity cuts are coming, not vitally needed stimulus, including an effective job creation program. More on that below.
In times of trouble, alcohol consumption increases. In fact, Bloomberg News said it’s soaring. So are lottery ticket sales, according to USA Today and firearms purchases at a time more people either feel scared or very uneasy.
The latest consumer confidence survey shows why. The Economist called it “dreadful with the headline figure falling to a two-year low.” It’s similar to a late August EU measure, showing sentiment “experiencing its biggest fall since December 2008.”
The dismal jobs picture explains. Economist David Rosenberg called August report “horrible.” So did economist and regular Progressive Radio News Hour contributor Jack Rasmus in his latest article headlined, “August Jobs Report – Worse Than Zero,” saying:
Monthly, the Labor Department releases two reports:
— the headline Establishment Report Survey (Current Employment Statistics – CES), “over-represented by large businesses,” and
— “the more accurate Current Population Survey (CPS)”, also called the Household Survey.
CPS “covers small business much better than the CES,” so presents a more accurate jobs picture in its details, beyond the headline number that fluctuates up and down. In most recent months, it’s mostly pointed south, showing job destruction, not gains.
Until recently, large companies created modest numbers of jobs. However, “smaller businesses (are) the source of more than half of (all) created or lost.”
The latest headline CES number “showed no jobs created for the month of August. Zero,” confirming the dire state of America’s economy on track minimally for “relapse” or considerably worse because policy measures have done more harm than good.
CPS numbers best reflect the dire picture. They includes discouraged workers who’ve stopped looking and others “converted from full (to) involuntary part time jobs.”
Its more comprehensive picture also “shows the duration of the long-term unemployed.” In August, it revealed “an alarming additional 430,000 workers….hired as involuntary part timers, bringing their total to more than 8.8 million.”
Several points are relevant. Employers are shifting growing numbers of workers from full to part-time status. It reflects the first step “many companies take before reverting to direct layoffs in greater numbers,” as occurred in 2008.
As a result, Rasmus calls “(l)ast month’s major rise in part-time employment (perhaps) the canary in the mineshaft indicating mass layoffs to come in a few more months,” and continuing in 2012.
Moreover, the 430,000 rise in part-timers “represents an actual reduction of up to 215,000 jobs, as hundreds of thousands of workers are converted from” full to part-time status involuntarily.
Another dangerous trend was the “significant rise in the number of discouraged and marginally attached workers” in the past three months, a trend likely to continue.
Since June, 266,000 workers dropped out, as well as the 430,000 converted to part-time status – clear signs of a deteriorating labor market heading south.
Data for employed non-supervisory workers also “shows their average hourly wage and average weekly pay both declined” in absolute terms – before inflation impacted them further, especially for food, energy, medical and transportation costs, among others.
Obama will shortly announce his fourth job creation plan. After three previous tries, he struck out. Expect more of the same now, including tax cuts for businesses already sitting on $2 trillion they won’t spend at a time they’re beginning to shed, not add jobs.
In fact, added handouts may up executive pay and bonuses, but won’t create a single job.
Other Obama schemes may include corporate tax breaks for infrastructure development, cutting regulations that do more harm than good, job destructive trade deals even more counterproductive, and perhaps other ways to enrich America’s aristocracy at the expense of ignored working households.
As a result, expect the dire state of working America to get more dismal ahead, especially because of a bipartisan commitment for austerity at the worst possible time.
In a late August report, Rosenberg presented a disturbing global picture, including:
— 0% French GDP Q2 growth, combined with a 0.7% consumer spending decline, the largest in 15 years and third steepest drop on record;
— Australia had its worst employment report in the past eight months;
— Insolvent banker occupied Greece saw its GDP contract 6.9% at an annual rate;
— Hong Kong’s GDP dropped 0.5%, its first slippage in two years;
— South Korea, Japan and Britain just downgraded their outlooks;
— Bernanke did the same for America;
— China’s growth is slowing across the board; and
— Eurozone industrial output fell 0.7%, the sharpest drop in a year.
He also said America’s equity market is no higher now than 12 years ago and employment is stuck at the 2000 level. It’s actually much worse including discouraged workers.
These numbers, in fact, suggest worse to come later this year and in 2012. Out in front equity markets signal it, including 25 or more European, Asian and North and South American ones down over 20% and falling.
Detroit – Symbolic of Industrial America’s Decline
On July 31, UK Daily Mail writer Peter Hitchens headlined, “From Motown to Ghost town: How the once mighty Detroit is heading down a long, slow road to ruin,” saying:
America’s earlier industrial hub is in disrepair and dying. “Detroit is not just fading away gracefully, but noisily sick” in its death throes, “expiring as spectacularly as it once” thrived.
Fifty years ago, it was America’s fifth largest city with 1.85 million people. Today, it’s 11th ranked with about 700,000. Most of its “great buildings are ghosts.” So are its neighborhoods in disrepair, decaying and dying.
Detroit is a testimony to America’s decline. It’s the nation’s poorest city with unemployment well over 50%, including discouraged workers. It’s where hunger also affects the middle class.
It’s an intensifying crisis getting worse because little is done, and nothing so far tried has helped.
In spite of dire conditions nationwide, Obama brazenly addressed a Detroit Labor Day event, suggesting little will be done to deal with America’s worst employment crisis since the Great Depression.
Instead of highlighting the dismal state of working America, he focused on saying the “recovery” wasn’t “fully” complete. At the same time, he admitted that “times are tough,” no thanks to his destructive economic policies for over two and half years.
Instead of saying his September 8 address to Congress will outline significant help coming, he arrogantly claimed credit for “keep(ing) our teachers on the job,” despite continuing huge nationwide layoffs and his disdain for organized labor.
He said “(w)e’re fighting for health care when you are sick,” when, in fact, Obamacare rations it to enrich insurers, drug companies, and large hospital chains. He’s also working with Republicans to slash Medicare and Medicaid benefits before taking aim at cutting Social Security later on.
With Detroit in its death throes, he claimed the city “is coming back.” He praised his “strong cities” initiative under which mayors like Detroit’s David Bing are “downsiz(ing)” by cutting services for thousands of residents.
He claimed he and Republicans are working together “to solve our problems,” when, in fact, everything they’ve exacerbated them.
Overall, he had the audacity to suggest he’s helping working Americans when his policies increased poverty, unemployment, hunger, despair and anger about political Washington’s indifference to their growing misery.
For the fourth time, Obama’s Thursday address to Congress will explain policy measures similar to past failed ones.
As a result, expect harder than ever hard times ahead with working Americans left increasingly on their own, sink or swim because neither Obama or Congress give a damn enough to help them.
Stephen Lendman lives in Chicago and can be reached at email@example.com.
Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.