Not surprising to readers of this blog:
Demand is escalating for multi-generational housing as buyers scale down during the deepest housing crisis since the Great Depression, according to a survey by Coldwell Banker Real Estate in Parsippany, New Jersey.
Thirty-seven percent of the company’s real estate agents polled in January said that in the past year, buyers were increasingly shopping for homes that fit more than one generation. Almost 70 percent of the agents said they expect economic conditions will drive still greater demand for this type of housing over the next year.
Remember that last summer our Lost Decade poll found that:
34% of the young workers surveyed still live with parents—theirs or a spouse’s. For those making less than $30,000 per year, 52% were still living with parents. That doesn’t just affect young people, either.
Another thing that poll found was a loss of hope among young workers. In 1999, 77% of young workers said they felt “hopeful and confident about being able to achieve economic and financial goals over next five years.” In 2009, just 55% felt that way.
This housing trend of families gathering together to buy houses that will fit multiple generations is yet another sign of a loss of optimism. People aren’t thinking that having adult children living with their parents is just temporary—they’re planning for it to continue for years to come. Do you think they’d be doing that if they thought things were going to get better any time soon?
(h/t Alison Omens)
Tags: economy, Housing
Friday brought a quarterly estimate of Gross Domestic Product (GDP), and it exceeded expectations, growing at a rate of 5.7%, up from 2.2% the previous quarter. That sounds excellent, and it’s certainly not a bad thing. For a visual, check out the graph at Tapped.
But there are a couple of important caveats before we get too excited.
First, will it last? Meteor Blades writes,
Few, if any, analysts believe the fourth-quarter number can be sustained. But if all four quarters of 2010 average even somewhat less than half that percentage, at least 2.3%, the history of previous recessions indicates a job recovery may soon be under way, with perhaps only one or two months more of net job losses. See New Deal dem’s analysis of this here. If hiring does exceed layoffs starting in February or March, that alone might improve morale for the millions who have been seeking work without success for six months or more.
What’s uncertain, however, is whether half of today’s percentage can be averaged in 2010. One reason is that GDP was held down in previous quarters because businesses sold goods in their inventories but didn’t order new goods. The pace of fourth-quarter growth was heavily driven by a slowing of this inventory liquidation. Which means that businesses, whether they were dealers in software or motor vehicles, ordered new goods to restock their shelves. Thus, 3.39% of the GDP total for the fourth quarter came from this inventory cycle. In the third quarter, private inventories came in at just 0.69%.
Second, the question of jobs. It doesn’t really help to produce more if people still don’t have jobs.
The economy has been able to grow even without adding workers because employers have found ways to accomplish more with fewer workers. Productivity grew at a robust rate of 8.1 percent in the third quarter of 2009, the most recent data available.
So what’s the outlook there?
Without a much stronger GDP performance than most analysts have been predicting for 2010, we’ll be lucky to see restored a fourth of the 8 million jobs lost in the past 25 months. If something along the lines of the timid jobs bill that passed the House in December gets an OK from the Senate, it may provide modest relief, just as the small business tax incentives and export initiative President Obama outlined Wednesday may do. But these are simply not enough. The beneficial impact on growth from the existing stimulus package is already fading, even though more than half of the $787 billion remains to be spent, as explained here.
So we should be optimistic, in a cautious way. And we shouldn’t let up on the pressure for a strong jobs bill with major investment in infrastructure.
Tags: economy, Jobs, unemployment
This is a helpful reminder to come back to next time you’re trying to decide who’s right and who’s wrong on economic stimulus:
The GOP said the stimulus package would fail to create jobs. We now know the Republicans were wrong.
The GOP said the recovery efforts would fail to generate economic growth. We now know the Republicans were wrong.
The GOP said the stimulus “failed.” We now know the Republicans were wrong.
The GOP said the government should cancel unspent recovery funds. We now know the Republicans were wrong.
The GOP said tax cuts are more effective at stimulating the economy than government spending. We now know the Republicans were wrong.
Tags: economy, stimulus
Just in case you were thinking of looking around the economy and feeling like things were peachy keen.
During the good years of the last decade, such as they were, growth was driven by a housing boom and a consumer spending surge. Neither is coming back. There can’t be a new housing boom while the nation is still strewn with vacant houses and apartments left behind by the previous boom, and consumers — who are $11 trillion poorer than they were before the housing bust — are in no position to return to the buy-now-save-never habits of yore.
What’s left? A boom in business investment would be really helpful right now. But it’s hard to see where such a boom would come from: industry is awash in excess capacity, and commercial rents are plunging in the face of a huge oversupply of office space.
Can exports come to the rescue? For a while, a falling U.S. trade deficit helped cushion the economic slump. But the deficit is widening again, in part because China and other surplus countries are refusing to let their currencies adjust.
So the odds are that any good economic news you hear in the near future will be a blip, not an indication that we’re on our way to sustained recovery. But will policy makers misinterpret the news and repeat the mistakes of 1937? Actually, they already are.
Neil Irwin of the Washington Post:
It was, according to a wide range of data, a lost decade for American workers. The decade began in a moment of triumphalism — there was a current of thought among economists in 1999 that recessions were a thing of the past. By the end, there were two, bookends to a debt-driven expansion that was neither robust nor sustainable.
There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.
Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 — and the number is sure to have declined further during a difficult 2009. The Aughts were the first decade of falling median incomes since figures were first compiled in the 1960s.
And the net worth of American households — the value of their houses, retirement funds and other assets minus debts — has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s.
Meteor Blades at Daily Kos:
But the long-term reality is that little-to-nothing has been done over the past few decades to deal with the real killer in all this, structural unemployment, the kind that permanently eliminates jobs. Some structural unemployment caused by changing technology and innovation and a shift in consumer preferences is inevitable. Driven by the right policies, equally well-paying jobs come around to replace them. But some structural unemployment comes from eliminating jobs without replacing them with anything. At least not by anything in the U.S. Workers displaced in this way, especially older but-not-yet-financially-able-to-retire workers, can find themselves in tough straits for a long time. The country’s full of those. They aren’t, of course, the only victims as any twentysomething college graduate with $35,000 in student loans and no job can attest.
America needs a transformation to put the brakes on our race to the bottom. This ought to include a lot things, not the least of which are a permanent federal jobs program, decent pay for a shorter standard work week (which hasn’t been changed for 75 years), and incentives, including legal ones, for cooperative enterprise ownership.
An essential ingredient of this transformation is an industrial policy whose components include fairer trade policy and a labor-market strategy. Most countries – including almost all of America’s leading trading partners – have such policies, each of them designed, even by the Red capitalists of authoritarian China, to make life for their citizens better.
So, in the coming weeks, while eagerly watching the news about unemployment, the GDP and all the other statistics that indicate the immediate direction of the economy, it’s well to remember that America’s fate now rests in the hands of other countries’ industrial policies. Not having our own is, ultimately, an economic suicide pact courtesy of the promoters of the same policies and behavior that got us into this gigantic economic mess.
This is where we stand as we enter a new decade. This is what we have to fight to change, and really change, not just settling for positive blips.
Ronald Brownstein has a wrap-up on the Bush administration’s economic record and how it affected working families. When we consider where we are now, economically speaking, let’s be sure to consider how we got here.
On every major measurement, the Census Bureau report shows that the country lost ground during Bush’s two terms. While Bush was in office, the median household income declined, poverty increased, childhood poverty increased even more, and the number of Americans without health insurance spiked. By contrast, the country’s condition improved on each of those measures during Bill Clinton’s two terms, often substantially.
Consider first the median income. When Bill Clinton left office after 2000, the median income-the income line around which half of households come in above, and half fall below-stood at $52,500 (measured in inflation-adjusted 2008 dollars). When Bush left office after 2008, the median income had fallen to $50,303. That’s a decline of 4.2 per cent.
When Clinton left office in 2000 13.7 per cent of Americans were uninsured; when Bush left that number stood at 15.4 per cent. (Under Bush, the share of Americans who received health insurance through their employer declined every year of his presidency-from 64.2 per cent in 2000 to 58.5 per cent in 2008.)
When Clinton left the number of Americans in poverty stood at 11.3 per cent; when Bush left that had increased to 13.2 per cent. The poverty rate for children jumped from 16.2 per cent when Clinton left office to 19 per cent when Bush stepped down.
We got to this economic moment not because of gremlins in the finance industry’s computers, but because of a set of policies that didn’t work for working families. We get out of it by thinking about people before profit, through health care reform, by regulating the finance industry, by making it easier for working people to join unions and bargain for better wages and working conditions. We don’t get out of it by pretending that people are not struggling:
Consider this: Some 9.4 million new jobs would have to be created to get us back to the level of employment at the time that the recession began in December 2007. But last month, we lost 216,000 jobs. If the recession technically ends soon and we get to a point where some modest number of jobs are created — say, 100,000 or 150,000 a month — the politicians and the business commentators will celebrate like it’s New Year’s.
But think about how puny that level of job creation really is in an environment that needs nearly 10 million jobs just to get us back to the lean years of the George W. Bush administration.
No celebrating the recovery of “the economy” until the people who live in it are employed and have health care and aren’t being foreclosed on. Working people are the most important part of the economy, and must be treated as such.
Tags: economy, poverty, unemployment
I got behind-hand and missed new jobless day yesterday. The news was relatively good – relative to recent months, though, not relative to non-recession times. Sometimes I feel like an oracle of doom always saying “question the cheery headline numbers,” but the thing is, it’s so important to remember that millions of people are still struggling, and that small improvements are not enough.
And to illustrate how serious the situation is despite occasional better-than-expected numbers, the New York Times has an article detailing the difficulty workers who have been laid off have finding new work.
A decline in labor mobility may help explain some of the failure of workers to find jobs even after they have been unemployed for months. In previous downturns, some regions remained relatively strong, and attracted workers from other areas. This time, the credit crisis has damaged job prospects almost everywhere, and plunging home prices mean that some who would like to move cannot afford to do so because they owe more than their house is worth.
Another factor is that workers now are less likely to be able to return to their old employers when the economy recovers. At the height of unemployment in 1982, one of every five unemployed workers was on a temporary layoff, with the expectation they would be recalled, sooner or later. Today the comparable figure is 1 of 10.
The point is to look at the whole picture, and remember that this is about working people and about economic justice.
Tags: economy, unemployment
Economic Recovery Series: Step #1 – Realize you are part of the game
Workers across the globe, meaning you and me, are caught between a rock and a hard place as we try to figure out what happened with the economy and how to ride out this rough economic climate, a climate which according to this article is going to get rockier as we face a potential economic relapse in the coming year.
From everything one reads in the paper, on the web, or sees on TV, you’d think it’s the end of the world. Let’s take a moment to breath and relax, because as scary as this all seems, the truth is that this economic crisis is nothing new. As you can see in the chart below, economic crises have happened before (and before, before that, and even before that), and each time working people have had to play a role in restoring order and moving the nation in a better direction that was more sustainable.
Remember the abolishment of slavery, or “The New Deal”? Someone pushed for that to happen, and if you’re reading this blog chances are it was someone like you.
(This is a chart called the Kondratieff Wave, which stated that capitalist economies held recurring periods of booms and busts. See also here. A more controversial graph which looks at the role of war and economic recovery can be seen here.)
I wouldn’t be the first to admit that the solutions weren’t perfect and had flaws, but what’s made America a beacon of hope has been our uncanny ability as a people to turn a crisis into an opportunity for advancement.
The financial crisis, if seen in this context, is our challenge and opportunity to lead the U.S. and global economy in a better direction. We have an opportunity to turn record levels of food production into a solution to the global food crisis. We have an opportunity to address inequalities like American workers making less money today than their grandparents did 30 years ago, even though the U.S. workforce is more productive today than in times past.
Over the coming weeks I hope to join my fellow editors in a conversation about how to move beyond the economic crisis, and what workers can do to ensure that they are part of finding solutions that everyday people will feel and see. Solutions like passing universal health care, leveling the playing field for workers by passing the Employee Free Choice Act, or passing comprehensive immigration reform that does not criminalize workers looking for a better life.
In that spirit, I submit that the first part of economic recovery is to figure out where you stand in relation to the economic crisis. That is to say, how did we contribute to it, what are the impacts we are feeling, and what are 2-3 things I can do to help restore the economy? Need a hand figuring out what you can do? Check out this awesome poster/tool that the folks over at Yes! Magazine put out on 31 ways to jump start the local economy (PDF).
What do you think?
CNBC’s headline makes things sound pretty rosy: “Durable goods in surprise jump; jobless claims dip.” And there is some good news:
New orders for long-lasting manufactured goods saw their biggest gain in 16 months in April and fewer workers filed for new jobless benefits last week, according to official data on Thursday that suggested the deep recession was abating.
But if you look past that opening, it’s not all sunshine. A few paragraphs down we get this sobering fact (as if we weren’t sober enough thinking about the economy these days):
However, the number of people staying on benefit rolls after drawing an initial week of aid increased 110,000 to a higher-than-forecast 6.79 million in the week ended May 16.
Calculated Risk looks into it, and 6.79 million continued unemployment claims is not just higher than forecast, it’s an all-time record as a raw number. At 5.1% of covered employment, this is not a record as a percentage—in 1975 it hit 7%–but it’s not exactly a good thing, either. Calculated Risk’s take is that “There is a reasonable chance that claims have peaked for this cycle, but it is still too early to be sure, and if so, continued claims should peak soon.”
We don’t just have to worry about unemployed workers, either. Underemployment is a real problem, as the Washington Independent details in a must-read article:
“The number of people under economic stress is much bigger than the official unemployment rate,” said Chad Stone, chief economist at the Center on Budget and Policy Priorities. Who are these people? The Bureau of Labor Statistics takes a stab at quantifying these people to create a more comprehensive picture of who’s not working and why not. The Bureau identifies categories of Americans it labels as “marginal,” meaning that they are unemployed and have looked for a job in the past, but not recently, and “employed part time for economic reasons,” referring to workers who would take full-time schedules if they could. Once these groups are added to the base unemployment rate, the number climbs all the way up to 15.8 percent in April, the highest number since the BLS began tracking these sub-groups in 1994.
Yet there are some who say even these numbers don’t tell the whole story. Progressive think tanks talk about “skill underemployment.” “It’s the computer engineer who lost [his] job and is now working at 7-11,” said Heidi Shierholz, an economist with the Economic Policy Institute. “They show up as employed, not as a bad labor market outcome,” she said. In reality, though, these workers, are both earning and contributing far less than their potential — one definition of underemployment. The labor bureau’s data-collection also doesn’t take into account the millions of Americans who have had their hours or wages cut in recent months.
And it’s not just the wages these underemployed people are earning right now that are at issue. They aren’t contributing as much to Social Security or to their private pension plans and they are far less likely to have health insurance, which means that underemployment can have an impact on people’s lives even for years after they return to full employment. (Of course, returning to full employment in this economy is difficult—in December, for every available job there were 4.1 people looking for work and it’s gone up since.)
Looking at another measure of economic health, Calculated Risk also reports that new home sales were flat in April, which “is the second lowest sales for April since the Census Bureau started tracking sales in 1963.” Again, their conclusion boils down to that the absolute worst may have passed, but on home sales, like unemployment, it will be some time before we see the kind of recovery that will reach throughout the economy to all of us.
The upshot is that while the cheery headlines about positive economic numbers aren’t wrong, we need to look more deeply.
Tags: economy, unemployment
by Rose Bonesso—Pennsylvania
As the office manager in Pittsburgh, I rarely get the opportunity to talk to the people whose lives’ are being affected daily by a struggling economy and inadequate health care the way our Organizers do. Last week; however, I answered the phone and spoke to a woman who had been canvassed the prior evening. She said that she spent most of her adult life thinking that Unions were the “problem”, but after talking with one of our Organizers, she felt differently. She opened about her own workplace where she had always made a good living in commission sales, but now, the corporation was demanding more and more and offering less and less in terms of pay, benefits and incentives. She said she was about 10 years away from retirement, and wanted to try and organize a Union!!
She went from being anti-Union to establishing herself as a Union organizer!
It’s always amazing to me the real, tangible difference that our organizers are making out in the field every single day.
Tags: economy, Health Care, union
by David Weston—Pennsylvania
One woman was outraged at the rising price of gas. “I was just talking about this!” she told me. She reminded me that, “if this was the 70′s, we’d be out protesting and demonstrating with signs in hand!”.
I let her know that her mentality was exactly the reason that I was out in the community building up that support. I realized the universality of the Working America message and the outrage of average Americans at the state of the economy. She and I both knew that if our politicians maintained the status quo, people would stand up and fight back, especially with their ballots at the polls.