Thursday, January 5, 2012
A view from the precipice: the American economy
In the last several weeks we've seen signs, small, yet significant because of their consistency, of an upturn in the American economy, with unemployment dropping to 8.6% after spiking to 9.9% in April, 2010. Nonetheless, we're still facing a bumpy ride and it may take another three years to right ourselves in even the best scenario. Just yesterday, Boeing announced it will close its plant in Wichita in 2013, resulting in the loss of 2160 jobs. Boeing faults upcoming defense cuts.
This is a case in point. On the one hand, there is a need to stimulate the economy; on the other, a need to cut spending. As I see it, the priority should be on getting people back to work and preserving the jobs that remain. Yet I see the President will announce today a $500 billion reduction in defense spending. The fallout in job losses is incalculable, and I'm puzzled as to how this squares with his near daily appearances in several states, giving pep talks on what he's done and wants to do to create jobs. The one hand gives, and the other hand takes away.
Here are some sobering facts you're not getting from the Washington power-brokers:
As of July, 2011, only 63% of men were working.
Unemployment stood at 7.6% when Obama took office. Three years later, it hovers just below 9%. If you're Black or Spanish, the numbers are staggering.
In the 1950s, manufacturing was 28% of our GEP. By 2010, it had dropped to 11.7%. In contrast, it stands at 25% in China. So much for free trade!
Forty percent of our jobs are low-paying, compared with 30% in the 1980s.
Median household income has fallen three years in a row.
Student loan indebtedness has soared to an average $25000 on graduation.
Consumer debt is rising again, as Americans turn to their credit cards to make ends meet.
The federal government now has ownership of more than 250,000 foreclosed homes.
Millions of Americans currently pay mortgages on homes no longer worth their purchase price.
The total debt of Fannie May, Freddie Mack, and Sallie Mae now stands at 6.4 trillion. It was 3.1 trillion in 2008.
Fifty million Americans lack health insurance. Meanwhile, companies are continuing to drop health care coverage for their employees or asking them to pay more.
Poverty is growing in the U. S., with one in five Americans now dirt poor, the highest figure since 1959 when the government began calculating poverty.
I haven't ventured into state indebtedness, a whole subject in itself. Most of the states are in hock for millions, if not billions, especially in funding pensions for their public employees. In virtually all the states, costs are being passed on to cities and counties. Meanwhile, infrastructure, education, safety, health and environment are being compromised with spending reductions. Some states are selling off assets like tollways to foreign investors.
While all this is going on, Sears is closing, yet again, a number of its stores, Barnes and Noble just announced a steep drop in profits, and Bank of America will eliminate 600 branch banks.
Add to this the danger of a Europe meltdown: Greece, Ireland, Spain, Portugal, Italy going into default. Our economies are interlocked in today's global village. Should it happen, it means an even deeper recession.
Meanwhile our politicians seem more interested in power than solutions. Worse, they have been lying to us. Maybe they need to join the unemployed.