The economy is still in the gravitational pull of the Great Recession, and all the booster rockets for getting us beyond it are failing. The odds of a double dip are increasing.
In June the nation added fewer jobs than necessary merely to keep up with population growth (private hiring rose by 83,000 after adding only 33,000 jobs in May). The typical workweek declined. Average earnings dropped. Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year.
So what are we doing about it? Less than nothing.
The states are running an anti-stimulus program (raising taxes, cutting services, laying off teachers, firefighters, police and other employees) that's now bigger than the federal stimulus program. That federal stimulus is 75 percent gone anyway. And the House and
The second booster rocket -- the Fed's rock-bottom short-term interest rates -- is having almost no effect.
That's because jobs and wages are so lousy that consumers don't have enough money to buy much of anything, making small businesses bad credit risks and causing big ones to sit on the huge pile of cash they've accumulated.
The people who are suffering the most from the failure of public officials and the greed of large bankers are the
least able to endure it. Unemployment among people with four-year college degrees is barely over 5 percent; among
high-school dropouts it's over 25 percent. Those who have been jobless the longest or who have left the labor force
altogether are men over 50 who are least likely to get back in. Families most in need are losing the services --
The irony is that had there been no bank bailout in 2008 and 2009, no large stimulus, and no extraordinary efforts by the Fed to pump trillions of dollars into the economy, we'd have had another Great Depression. And because it would have sucked almost everyone down with it, the nation would have demanded from politicians larger and more fundamental reforms that might well have lifted everyone and set America and the world on a more sustainable path toward growth and shared prosperity: a stimulus that financed the rebuilding of the nation's infrastructure and alternative energies, single-payer health care, a cap on the size of big banks and resurrection of Glass-Steagall, earnings insurance, an Earned Income Tax Credit that extended into the middle class, and a truly progressive tax coupled with a price on carbon to pay for all of this over the long term.
No one in their right mind would have wished for another Great Depression, of course. But we seem to have gotten the worst of all worlds. The bank bailout, the stimulus, and the Fed brought us back from the brink just enough to dampen zeal for anything more. As a result, we are now slouching toward a tepid recovery that could just as well fall into a double-dip recession, while a large portion of our population suffers immensely.
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Slouching Toward a Double Dip or Lousy Recovery at Best
(c) 2010 Robert Reich