Saturday, March 26, 2011

It's (Still) the Economy, Stupid

I’ve got some bad news, America.

Remember that “Great Recession” you used to hear so much about in the news? You may have thought it ended. It hasn’t. The economy still sucks.

Of course, if you are one of the hundreds of unemployed Americans still struggling to find work, this is not news to you. You are well aware of the economic reality. But those lucky enough to have a job seem to have completely forgotten about the recession.

Contrary to what you may have read in the corporate newspapers, the nation is still struggling to recover from the greatest economic downturn since the Great Depression.

Robert Christensen is one of the unlucky ones. The 49-year-old Portland resident lost his job as a marketing director last June and has been looking for work ever since.

“I’m sorry, but I don’t see any sign of improvement,” Christensen said. “If the economy is improving, I certainly have not benefited from it. I have applied to every job I can find. But so far nothing has worked out. I have been rejected from them all.”

Christensen was one of 700 attendants at a Portland Press Herald-sponsored job fair, at the Italian Heritage Center, on Tuesday. According to a job fair staffer, the economy is getting better, but “it’s a very slow growth.”

Some of that growth includes a noticeable rise in consumer spending. charts a $5.9 billion increase in credit accounts for January 2011. (However, rising gas prices, and expected surges in the cost of items such as cotton, grain and coffee, may halt this rise in spending in its tracks.)

Unfortunately, many economists are using these incremental, short-term signs of improvement to overemphasize the economy’s overall health.

Let’s look at the indications of economic improvement, shall we?

A recent story in Kiplinger’s offers ten mundane though not insignificant signs the economy is on the rebound. These include the “latte factor,” or the increase in sales of expensive, Starbucks-style coffee drinks, which many may have viewed as an unjustifiable luxury when money was tight. The article claims such caffeinated beverages are “one of the first little luxuries that consumers find worth shelling out for when they start to feel more comfortable with the direction of the economy.”

Another source citing economic growth is even more dubious—Warren Buffett.

In a recent interview with NBC’s business network, CNBC, the billionaire investor made grand claims of an economy on the upswing.

Buffett’s source for this claim? The continued success of his own businesses, which include Berkshire Hathaway, Inc. and the Burlington Santa Fe railroad. While Buffett has become something of a go-to economic pundit in recent years, one must wonder if indeed there ever was a recession for billionaires like him. Seeking Buffett’s views on the economic hardships of regular, working-class citizens is like asking an American what it is like to work in a Chinese sweatshop.

The fact is the increased financial earnings of Starbucks and Warren Buffett are no accurate barometer of the economy’s health. Things are (slowly) getting better, yes. But to claim the recession is “over,” or “behind us,” is downright insulting to those who are still out of work.

“Washington has lost interest in the unemployed,” writes New York Times Op-Ed columnist, Paul Krugman in a recent piece (“The Forgotten Millions,” March 18, 2011).

“It might not be so bad,” he continues, “if the jobless could expect to find new employment fairly soon. But unemployment has become a trap, one that’s very difficult to escape. There are almost five times as many unemployed workers as there are job openings; the average unemployed worker has been jobless for 37 weeks, a post-World War II record.”

Part of the problem, Krugman explains, is while the mass layoffs that marked the start of the recession have decreased, most companies are still not hiring new employees.

Corporations’ modern view of employees as another expense (as opposed to an integral investment) means many of them are literally sitting atop piles of income that was not earned the old-fashioned way, but saved by skimping on the workforce. (Add to this, another disturbing modern development in which many employers are refusing to even consider a job application from a person who is currently unemployed.)

Krugman writes, “Put it this way: At this point, the U.S. economy is suffering from low hiring, not high firing, so things don’t look so bad—as long as you’re willing to write off the unemployed.”

The other problem, according to Krugman and other economists, is the Obama administration’s initial stimulus bill was too small and timid—especially when compared with the gargantuan trillions lavished on Wall Street.

And that, in many respects, represents the root of our economic troubles. We have money for Wall Street banks, but not for regular Joes. While the Republican Congress is focused almost maniacally on cutting spending on things like public workers, welfare programs and NPR, none of the money we are saving has been allocated for job-creation. And, as I noted in my previous post, we still have plenty of money for the ongoing wars in Iraq, Afghanistan, Pakistan and now Libya.

So, no: The recession is not over. Far from it. But try telling that to the corporate media and the Warren Buffetts of the world.

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