Worry of Double-Dip Recession and Jobs Crisis Lost in Debt-Ceiling Coverage
A popular T-shirt in the Caribbean, referring to its history of piracy and ill-treated sailors, reads, “Keep up the flogging until morale improves!”
But it’s no joke to imagine the likelihood of America going through a double-dip recession, considering that the recovery from the recent Great Recession has been the weakest of any since 1945, as Working In These Times contributer Jack Rasmus writes in Z Magazine. In fact, the recovery has been largely invisible for the bottom 90% of Americans.
The jobs crisis has been more severe and the “recovery” even weaker than we thought, according to new data.
JOBS CRISIS LOSES IN DUEL WITH DEFICIT NARRATIVE
But these vital facts lave largely been overshadowed through the Republicans’ successful campaign to re-define reality in America—with the assistance of a compliant mainstream media—so that the nation focuses on deficit reduction as its sole priority and preoccupation.
New data released last week shows that the economic recovery is proceeding at an even slower pace than we imagined, as Catherine Rampbell reports in the NY Times:
The broadest measure of the economy, known as the gross domestic product, grew at an annual rate of less than 1 percent in the first half of 2011, the Commerce Department reported on Friday. The figures for the first quarter and the second quarter, 0.4 percent and 1.3 percent respectively, were well below what economists were expecting, and signified a sharp slowdown from the early months of the recovery.
However, those at the top have recovered very, very nicely:
Corporate profits are now $200 billion higher than they were at their peak in 2006 at $1.7 trillion. And that does not count another $1 trillion multinational corporations admit they are holding in their offshore subsidiaries. Some independent sources estimate this offshore profits hoarding are as high as $1.5 trillion….
Yet profits rose 243 percent in 2009 and another 61 percent in 2010.
Ironically, the source of the profits is the particularly distressing part, because the American economy has so radically departed from its pattern of high wages fueling high production and high profits. As Rasmus points out,
Profit margins are at an 80 year high, driven not so much by increased sales as by constant cost cutting—which means layoffs, reduced benefits, lower wages, and fewer hours of work.
The continued misery for workers and the unemployed has weakened consumer spending to an unprecedented extent. Again, Rasmus illuminates the long-running reality for tens of millions of Americans:
As Moody’s Inc. chief economist...Stephen Roach...put it in a Financial Times guest editorial this past June, “Never before in the post-second world war era have U.S. consumers been this weak for this long.” Roach’s statement undoubtedly holds true for the bottom 90 percent of consumer households.
But the wealthiest 10 percent households now account for 60 percent of all consumption in the U.S., according to some estimates…
One potential route to economic stabilization could be expanded government spending for badly needed infrastructure projects, as roads and bridges (think of the Twin Cities' I-35 freeway bridge collapse during the reign of Gov. Tim Pawlenty) and water systems continue to crumble and fail.
But instead, the Republicans—with White House and Democratic Senate capitulations making their intransigence all the easier to sustain—block any such projects. The notion of maintaining the public sector to both perform essential tasks—like airline and airport inspection, meat inspection, etc.—and provide a source of economic stability are both under attack at the state and federal level from Republicans, as Rasmus ruefully documents.
[S]tate and local governments' layoffs have continued to rise at around 25,000 a month. That’s more than 300,000 a year, a figure that will no doubt go higher over the course of this year. All this before the federal government starts major layoffs later in 2011 and 2012 when budget cuts are implemented in earnest.
This attack upon the public sector—quietly occurring for some time in Washington, D.C. and then exploding in Wisconsin—will further depress the economy as an increasing share of public workers lose pay and benefits, and tens of thousands more lose their jobs.
But the mainstream media’s commentators—with exceptions like CNN’s Ali Belsher and Reuters’ Krystia Freeland—failed to bring out the context of the jobs crisis as the debt-ceiling fight unfolded. For the corporate media, the debt-ceiling fight simply provided a summertime blip in the ratings covering an ongoing, suspenseful story with high-profile winners and losers.
The problem with their narrative is that the real losers in any reduction in vital government spending—working people and the poor and the jobless—were cut out of the story entirely.
Despite an estimated 2 million jobless Americans who have exhausted their unemployment benefits and many more approaching the end of their economic lifeline, the fate of the jobless in the debt-ceiling fight was almost entirely omitted. Laura Clawson of Daily Kos provided this update on August 1:
White House officials confirmed that there would not be an extension of unemployment benefits as part of the final package. The administration had insisted that an extension be part of the grand bargain it was negotiating with Boehner. But when those discussions fell apart, so too did efforts to ensure that unemployment insurance was part of a final package. A senior administration aide added that the president would push for an extension in the months, if not weeks, ahead.
With a double-dip recession increasingly likely, the jobless have good reason to feel that the White House simply abandoned them for a fight on much less favorable terrain sometime in the easily-deferred future.
The merciless flogging will be continuing, with little notice from those in the mainstream media or even the Democratic political establishment.