The Frightening Truth About the Economy
Robert B. Reich
We're Still in Danger of Sinking
Why aren't Americans being told the truth about the economy? The report of 216,000 new jobs in March is being touted as evidence we're finally out of the woods. But in reality, we're still in the swamp and in danger of sinking.
Consumers are 70 percent of the American economy, and consumer confidence is plummeting. It's weaker today on average than at the lowest point of the Great Recession. The
Pessimistic consumers buy less. And fewer sales spells economic trouble ahead.
What about the 216,000 jobs added in March?
It's peanuts compared to what's needed. Remember, 125,000 new jobs are necessary just to keep up with a growing number of Americans eligible for employment. And the nation has lost so many jobs over the last three years that even if we continued producing new ones at the rate of 216,000 a month, we wouldn't get back to 6 percent unemployment until 2016.
But isn't the economy growing again -- by an estimated 2.5 percent to 2.9 percent this year? Yes, but that's even less than peanuts. The deeper the economic hole, the faster the growth needed to get back on track. By this point in the so-called recovery, we'd expect the economy to be growing by 4 percent to 6 percent.
Consider that back in 1934, when it was emerging from the deepest hole of the Great Depression, the economy grew 7.7 percent. The next year it grew over 8 percent. In 1936 it grew a whopping 14.1 percent.
Add two other ominous signs: Real hourly wages continue to fall, and housing prices continue to drop. Hourly wages are falling because with unemployment so high, most people have no bargaining power and will take whatever they can get.
Housing is dropping because of the ever-larger number of homes people have walked away from because they can't pay their mortgages. But because homes are the biggest asset most Americans own, as home prices drop most Americans feel even poorer.
There's no possibility government will make up for the coming shortfall in consumer spending. To the contrary, government is worsening the situation.
State and local governments are slashing their budgets by
Doesn't anyone remember what happened in 1937, when the economy was assumed to be out of the woods and government spending was cut too soon? The economy fell off another cliff.
In other words: Watch out. We may avoid a double dip, but the economy is still in bad shape, and the booster rockets are disappearing.
So why aren't we getting the truth about the economy?
For one thing,
To the extent that non-financial companies are doing well, they're making most of their money abroad. Since 1992, for example,
Republicans, for their part, worry that if they tell it like it is, Americans will want government to do more rather than less. They'd rather not talk about jobs and wages, and put the focus instead on deficit reduction (or spread the lie that by reducing the deficit and firing more people we'll get more jobs and higher wages).
I'm sorry to have to deliver the disturbing news, but it's better you know.
- The Frightening Truth About the Economy
- 7 Problems That Could Derail the Global Economic Recovery
- How the National Debt Affects You
- March Jobs Report Brings Good News -- Finally
- Spreading Wealth the Right Way
- 3 Reasons the U.S. Economy Remains in a Coma
- The Biggest Lies About Jobs
- Why Higher Unemployment Might Not Be a Bad Thing
- Not Raising the Debt Ceiling Would Worsen the Fiscal Situation
- We Can't Be Serious About the Debt Ceiling Until We Fix Spending
- It's BACK! The Return of Stagflation
- Federal Budget: Why Triangulation Won't Work
- Quitting Fear Inc
- Republican Obsession with Spending Cuts will Kill Jobs
- What Happens After Quantative Easing 2 Ends?
- What You Really Pay for at the Pump
- Brighter Job Outlook for Class of 2011
- Jobs Report Shows Growth, But Nothing to Shout About
- The Real News on Jobs
- The Democrats' Lame Response to the Republican Shakedown
- The Slow Decline of North America
- 'So Be It' Economics
- St. Louis Mayor Discusses Economy, Education, and Future of Cities
- The Incredible Shrinking Budget Debate
- The Wages of Infamy
- A G-Zero World: New Economic Club Will Produce Conflict Not Cooperation
- The Post-Washington Consensus
- Currency Wars: Then and Now
- Currencies Are Not the Problem
- The Great Jobs Recession Goes On
- America's Corporate Recovery Is More Fragile Than You Think
- Impending Debate Over Spending Cuts Has Nothing to Do With Reviving Economy
- Pruning Farm Subsidies
- The Wealth Gap Around the World
Available at Amazon.com:
The Frightening Truth About the Economy | Politics
Copyright 2011, ROBERT REICH; DISTRIBUTED BY TRIBUNE MEDIA SERVICES, INC.