Wednesday, April 15, 2009

Pollyanna

The Center for American Progress reports on these trends during the current recession:

1. GDP growth turns negative: In the fourth quarter of 2008, GDP declined at an annual rate of 6.3 percent, the largest decline since the first quarter of 1982. The drop in growth reflected a 4.3% decline in consumer spending, a 22.8% fall in spending on homes, a 21.7% decrease in business investment spending, and a 23.6% drop in exports.

2. Job losses accelerate: The U.S. economy shed 663,000 jobs in March 2009. Since the recession began in December 2007, the economy has lost 5.1 million jobs, 2.7 million of them—or 53.35 of the total—in just the last four months.

3. Broad rise in unemployment rates: In March 2009, the unemployment rate was 8.5%—the highest level since October 1983. The African-American unemployment rate stood at 13.3%, the Hispanic unemployment rate at 11.4%, and the unemployment rate for whites at 7.9% in January 2009. Youth unemployment has soared to 21.7%; meanwhile, the unemployment rate for people without a high school diploma grew to 13.3%, compared to 9.0% for those with a high school degree and 4.3% for those with a college degree.

4. Hours at work at historic low: Average weekly hours amounted for production workers—the vast majority of the American workforce—fell to 33.2 hours in March. This was the lowest level since the Bureau of Labor Statistics started to calculate these data.

5. Wages still up due to low inflation: In February 2009, inflation adjusted weekly earnings were 2.5% higher and hourly earnings were 4.1% higher than a year earlier, largely because of low inflation in recent months. This is unlikely to last. Inflation adjusted weekly and hourly wages have already decreased in January and February 2009.

6. Benefits decreased before the crisis: The share of private sector workers with a pension dropped from 50.3% in 2000 to 45.1% in 2007, and the share of people with employer-provided health insurance dropped from 64.2% in 2000 to 59.3% in 2007.

7. Family wealth disappears at record pace: From June 2007—the last peak of family wealth—to December 2008, total family wealth decreased by $15 trillion in 2008 dollars. This reflects a drop of 22.8% during these 18 months, the fastest decline in any 18-month period since the Federal Reserve started to collect these data in 1952. Total family wealth stood at 483.3% of after-tax income—the lowest level since March 1995.

8. The housing market stalls: New home sales in January 2009 amounted to an annualized, seasonally adjusted rate of 337,000, 41.1% lower than a year earlier, despite a year-over-year drop in median new home prices of 18.1%. At the current rate of new home sales, it will still take 12.2 months to sell all new houses on the market. Existing home sales were 4.6% lower and their median sales price 15.5% less than a year earlier.

9. Homeowners’ wealth losses mount: The values of all homes fell by $3.9 trillion from December 2006—the last peak of housing wealth—to December 2008. Home equity to after-tax income has dropped to 74.0%, the lowest level since September 1967, and home equity as share of home values dropped to record low of 44.7% by December 2008.

10. Mortgage troubles mount: One in nine mortgages is delinquent or in foreclosure. In the fourth quarter of 2008, the share of mortgages that were delinquent was 7.9% and the share of mortgages that were in foreclosure was 3.3%. The share of new mortgages going into foreclosure stayed at its record high of 1.1%.

11. Families feel the pressure: Credit card defaults rose to 6.3% of all credit card debt by the fourth quarter of 2008, an increase of 52.4% from the fourth quarter of 2007.


A drop in consumer spending, business investment, exports, wages, new home sales, home prices. Increases in mortgage foreclosures, unemployment, and credit card defaults. Real median household income dropped by $324 from 2000 to 2007 (despite growth among those making over $1 million) and the growth in absolute terms probably "reflect(s) increased costs for medical care -- the exact same coverage (but with a higher copay) which costs 15% more year-over-year shows up as increased total wages."

The middle class has been shortchanged for at least three decades and, obviously, no more so than the past year-and-a-half.

Obvious to all but the king of talk radio, Rush Limbaugh, whose relentless criticism of criticism of President Obama's economic policy comes with a complete denial of reality. Almost in passing, Limbaugh on April 15 claimed

This trickle down, this criticism of trickle down, Reaganomics, supply-side, whatever, is an ongoing effort to discredit the economic policies that created a 25-year economic boom.

No wonder Rush condemns Barack Obama's economic policies. Leave aside the growing health care crisis and the enormous budget deficits run up by supply-side guru Ronald W. Reagan and disciple George W. Bush. Limbaugh is not going to spend one minute of his three hours a week of talk radio looking at long-term trends in the American economy. But here is a guy who looks at today's economic picture- or that as of January 20, 2009- and sees an economic boom.

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