BEFORE COVID:
“The remarkable thing is how weak wages are, how weak the economy is, given that as a result of the tax bill we have a $1 trillion deficit.”
Great Depression, the Sequel
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Posted: Apr 26, 2020 12:01 AM
It took President Donald Trump three years to build the world’s best economy with an unemployment rate of only 3.5 percent, rising wages, strong consumer confidence and a robust stock market. Sadly, it only took three weeks for that healthy economy to be destroyed and the longer the economy is closed for business, the harder it will be for our nation to recover.
The economic statistics are truly staggering. The Congressional Budget Office (CBO) projects that the economy will shrink by 40 percent this quarter and that the unemployment rate will rise to 16 percent this year, before declining in the fourth quarter of this year and next year. For comparison, the nation’s all-time high unemployment rate reached 24.9 percent at the height of the Great Depression in 1933.
Since the shutdown began in mid-March, the nation has lost 26.5 million jobs. In Louisiana, there has been an astounding 5,677 percent increase in unemployment claims from last year. It has suffered the second highest percentage increase in unemployment, behind only Florida. These states and others that rely on retail sales, hospitality and tourism are suffering the worst. Other states like Vermont and Connecticut that have a greater number of high paying “white collar” jobs are doing much better.
Some health experts are arguing that the country cannot open the economy until there are almost no new COVID-19 cases. Such an argument is patently ridiculous. As noted by U.S. Senator John Kennedy (R-LA) such a strategy will lead to the collapse of the economy. According to Kennedy, “I wish we could do that, but we will have burned down the village to save it.”
Economic realities are why some states are moving forward with a limited opening, despite opposition from President Trump. The most aggressive action was taken in Georgia by Republican Governor Brian Kemp. He signed an executive order allowing a variety of businesses to open, including theaters, restaurants and gyms. These businesses must maintain social distancing guidelines and restrictions. The order did not extend to nightclubs or bars.
Other states such as Mississippi, Tennessee, Texas, Alaska, Montana and Colorado are relaxing restrictions and allowing some businesses to reopen. This trend will surely accelerate in the days and weeks ahead. Our country cannot afford to wait any longer, as we have no viable choice. Economic collapse is not an option that most Americans will tolerate.
This health driven economic experiment has already been too costly. It is undoubtedly one of the reasons why we have never closed our economy before, even during the flu pandemics of 1918, 1957, 1968 or 2009.
It is never a good strategy to throw people out of work, give them government checks and then try to restart the economy on a limited basis months later. There is no historical precedent showing that such a strategy has succeeded, certainly not on a short-term basis.
In response to the COVID-19 pandemic, there have been four stimulus packages already approved by Congress and signed into law by President Trump. These packages have cost over $2.8 trillion, boosting a federal debt that has already increased by $5 trillion during the Trump administration. The CBO report predicts the overall federal debt will approach $25 trillion this year with a budget deficit of $2.1 trillion next year. These debts are not sustainable as the federal government cannot print enough money to solve our self-imposed economic problems.
In the view of U.S. Senator Rand Paul (R-KY), these actions bring the United States “closer and closer to a point of no return, a point at which the world loses confidence in the dollar. A point at which our debt becomes an existential threat to our security.” He said, “No amount of money, not all the money in China, will save us from ourselves. Our only hope of rescuing this great country is to reopen the economy.”
Of course, Senator Paul is correct. If we do not reopen the economy, we will face an economic Armageddon worse than the Great Depression. Even an establishment Republican like Senate Majority Leader Mitch McConnell understands this reality. He warned his fellow Americans that “unless we get our economy up and running again there is not any way, we can spend enough to continue to prop up the country.”
President Trump claimed that the new relief package he signed on Friday will be “great for small businesses.” The reality is that a government loan is not “great,” but it is necessary assistance to allow many of these small businesses to remain open. True relief will not come until the economy is fully reopened and Americans can return to some semblance of normalcy.
Jeff Crouere is a native New Orleanian and his award winning program, “Ringside Politics,” airs locally at 7:30 p.m. Fridays and at 10:00 p.m. Sundays on PBS affiliate WLAE-TV, Channel 32, and from 7-11 a.m. weekdays on WGSO 990-AM & www.Wgso.com. He is a political columnist, the author ofAmerica's Last Chanceand provides regular commentaries on the Jeff Crouere YouTube channel and on www.JeffCrouere.com. For more information, email him at jeff@jeffcrouere.com
What Makes a “Healthy” Economy?
The coronavirus pandemic shows that we don’t have one.
April 16, 2020
Wikimedia Commons
Last week, Janet Yellin, former chair of the Federal Reserve, gave an upbeat assessment of the pre-pandemic U.S. economy. “Very fortunately we started with an economy that was healthy before this hit,” she told the PBS NewsHour. “The banks were in good shape, the financial system was sound, Americans at least overall on average had relatively low debt burdens.”
But how “healthy” was that economy, really? How healthy is an economy whose workers have so little savings that they can’t make the rent after missing just a couple of paychecks? How healthy is an economy whose small businesses have so little cushion that they face almost instant obliteration when their cash flow is disrupted? How healthy is an economy where hourly employees performing many essential services earn so little that they have to go to work sick to keep their jobs? And how healthy is an economy whose housing costs force millions to cram into overcrowded homes in polluted slums replete with high stress, malnutrition, asthma, diabetes, heart problems, and other chronic disease?
“There’s nothing fundamentally wrong with our economy,” said Fed chairman Jerome Powell in March. It was “resilient,” he said in February. Yellin concurred, citing the old good news in her hope that the “economy will recover much more speedily than it did from any past downturn.”
Recover for whom? The experts look at conventional measurements, which painted a picture of prosperity before COVID-19. The unemployment rate last September hit a fifty-year low, at 3.5 percent, and the rate for people without a high school diploma dropped to a new low of 4.8 percent. The GDP had been growing within the range considered ideal—two to three percent—and Powell reported a rising willingness of employers to hire low-skilled workers and train them.
But alongside the bright figures on unemployment and job creation, consider a competing set of numbers from before the pandemic: The poverty-level wages for those who harvest our vegetables, cut our Christmas trees, wash our cars, cook and serve our food in restaurants, deliver groceries to our doors, clean our offices, and even drive our ambulances. The 14.3 million households (11.1 percent) uncertain that they could afford enough food, and the 5.6 million families (4.3 percent) where at least one person has had to cut back on eating during the year. The 14.3 percent of black children with asthma, double the rate in the population overall. The 20 percent of children living in crowded homes shared with other families or three generations of their own, and the 50 percent of urban children who have lived in those conditions by age nine.
A pernicious dynamic of financial stress is the unexpected link between housing costs and malnutrition. For many low-wage families without access to such government subsidies as Section 8 vouchers or affordable housing, rent can soak up 40 to 60 percent of income, which can leave too little for other necessities. You have to pay the rent. You have to pay the electricity, phone, and fuel bills. If you need a car to get to work, which the vast majority of employees do, you have to make the car payments. Those are not optional. The category that can be squeezed is for food, and that’s what many poor families have to do.
A result is childhood malnutrition. It sometimes manifests itself in obesity resulting from cheap, bad food, which in turn can promote diabetes. It compromises the immune system. Even more seriously, deprivation of nutrients such as iron during key periods of brain development, both before and after birth, can lead to lifelong cognitive impairment. Studies show that children who suffered iron deficiency as infants, even if they’re fed properly later, still suffer as adolescents, scoring lower in math, written expression, and selective recall. Their teachers see them displaying “more anxiety or depression, social problems, and attention problems,” according to a National Academy of Sciences report.
So when federal and state governments are stingy with housing subsidies, as they always are, they are effectively, perhaps unwittingly, damaging children’s brain development and life opportunities.
The booming economy since the Great Recession of 2008, amplified by Republican tax cuts that gave corporations huge benefits, has begun to raise hourly wages, but not significantly.
If median hourly wages in certain jobs are put next to the official poverty line—currently $25,750 a year for a family of four—it’s clear why so many people are in desperate trouble so soon after the economy’s lockdown. Most poor families have only one wage earner, so assuming a full-time, 40-hour week, that person would have to be paid $12.38 an hour just to reach the poverty line. As of May 2019, according to the Bureau of Labor Statistics, the median hourly wage for ambulance drivers and assistants was just $12.45; for workers in retail sails, $11.37 to $12.14; for building cleaners, $12.68; for parking attendants, $12.11; and for fast-food and restaurant cooks and servers (some of whom also get tips), $11.00 to $12.45.
The lesson is to look beyond the unemployment rate and number of new jobs and examine how well those jobs pay. The “healthy” economy did little to narrow the wealth gap. The most recent Federal Reserve figures, from before the pandemic, showed the top 10 percent of households with a median net worth of $2,387,500 and the bottom 10 percent with minus $962—that is, they owed more than they owned.
Adding assets and subtracting liabilities as of the fourth quarter of 2019, the wealthiest 10 percent had 70 percent ($78.5 trillion) of the country’s total household net worth, and the bottom 50 percent had just 1.5 percent ($1.7 trillion). The top had miniscule debt, and the bottom half had miniscule financial assets alongside huge mortgage and consumer debt.
So, Janet Yellin was only partially right when she said that Americans had low debt burdens. Consumer debt reached a record high in 2019 of more than $14 trillion, according to Experian, the credit agency. But it was lower as a portion of income. And defaults and late payments were low enough to drive the average FICO score—a person’s credit rating—to a high of 703, up from 689 in 2010 at the end of the Great Recession. (A perfect score is 850.) Given the high credit card and other debt among the unwealthy, however, delinquency rates can now be expected to soar, pushing credit ratings down.
In that prospering economy, then, the glass was either half full or half empty, depending on whether you were looking from the top or from the bottom. There was no need to exaggerate the hardships at the bottom, as some Democratic candidates did with one misstated statistic.
BLOG: INTERESTINGLY HARRIS, WARREN AND SANDERS ALL WANT AMNESTY SO 40 MILLION ILLEGALS CAN BRING UP THE REST OF MEXICO. NOW DO THE MATH ON JOBS, HOUSING AND THE HOMELESS CRISIS
Senators Kamala Harris, Elizabeth Warren, and Bernie Sanders all said last year that 40 percent of Americans could not come up with the money to pay a $400 emergency expense. In fact, the contrary was the case, according to the Federal Reserve’s annual survey, “Report on the Economic Well-Being of U.S. Households.”
Asked to check all the ways they could pay for a $400 emergency, only 12 percent said they could not pay right now, 45 percent checked “with the money currently in my checking/savings account or with cash,” and 33 percent said they’d use a credit card and pay it off entirely at the next statement. To a follow-up question, 85 percent said that making the unexpected payment would not prevent their paying other bills.
On the other hand, 25 percent told the Federal Reserve that they were just getting by or finding it difficult to get by. That number is troubling enough, one bound to spike as stay-at-home orders continue. The economy was not “healthy” for those folks in the first place, and will not be so for many more.
Improvements will come not from the stalemate of left and right, or from their manipulating statistics, but from a new ideology of practical realism that honors the complex facts, without distortion. The free-market system is the one we have, and it can work for virtually everyone if everyone in government and business works for everyone. Too idealistic? Naïve? Probably.
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Nearly 1 out of every 3 renters did not pay their April rent.
The coronavirus tore apart the U.S. economy, leaving many people unemployed or furloughed for the time being. The ripple effects of those firings left many landlords without a check on the first of the month.According to data from the National Multifamily Housing Council and a consortium of real-estate data distributors, 69% of renters paid their landlords for April compared with 81% who paid for March. For an annual comparison, 82% of renters paid their landlords in April 2019.
The rental statistics included renters who had issued partial payments in the data. Some renters who are waiting on a paycheck may still make their rent payment before the end of April. The data set included only data from those who rent apartments and did not include single-family homes or low-income housing facilities. In total, data from more than 13.4 million renters was included in the report.
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THE REASON TRUMP IS NOT PROSECUTING EMPLOYERS OF ILLEGALS IS TO KEEP WAGES DEPRESSED!
More Americans Are Going on Strike
For decades, the decline of the American labor movement corresponded to a decline in major strike activity. But new data released by the Bureau of Labor Statistics, or BLS, indicates a recent and significant increase in the number of Americans who are participating in strikes or work stoppages. As a report from the left-leaning Economic Policy Institute explained on Tuesday, strike activity “surged” in 2018 and 2019, “marking a 35-year high for the number of workers involved in a major work stoppage over a two-year period.” 2019 alone marked “the greatest number of work stoppages involving 20,000 or more workers since at least 1993, when the BLS started providing data that made it possible to track work stoppages by size.” Union membership is declining, but workers themselves are in fighting shape.
EPI credits the strike surge to several factors. Unemployment is low, which bestows some flexibility on workers depending on their industry. If a work environment becomes intolerable or an employer penalizes workers for striking or organizing, a worker could find better employment elsewhere. (Though federal labor law does prohibit employers from retaliating against workers for participating in protected organizing activity, employers often do so anyway, and under Trump, the conservative makeup of the National Labor Relations Board disadvantages unions when they try to seek legal remedies for the behavior.)
The other reason undermines one of Donald Trump’s central economic claims. Though the president points to low unemployment as proof that his policies are successful, the economy isn’t booming for everyone. Wage growth continues to underperform. People can find jobs, in other words, but those jobs often don’t pay well. As the costs of private health insurance rise, adding another strain on household budgets, Americans are finding that employment and prosperity are two separate concepts.
Without a union, exploited workers have few options at their disposal. They can take their concerns to management, and hope someone in power feels pity. They can stage some kind of protest, and risk the consequences. Or they can find another job, and hope their new workplace is more equitable than the last. Lackluster wage growth suggests that this last option is not as viable as some right-to-work advocates claim. Unions afford workers more protection. Not only do they bargain for better wages and benefits, union contracts typically include just-cause provisions, which make it more difficult for managers to arbitrarily fire people for staging any sort of protest at work. Discipline follows a set process, which gives a worker chances to improve. Retaliation still happens, but would likely happen more often were it not for union contracts, which are designed to act as a layer of insulation between workers and managers with ill intent.
The new BLS data reveals that despite their relatively small numbers, unionized workers are exercising the power afforded them by their contracts. Elected officials ought to listen to what this activity tells them. A strike wave is a symptom that the economy is actually not as healthy as it superficially looks. Nobody withholds their labor unless they’ve exhausted all other options. Strikes and stoppages stem from exasperation, sometimes even desperation. Workers know they’re playing a rigged game, and they’re running out of patience.
“The remarkable thing is how weak wages are, how weak the economy is, given that as a result of the tax bill we have a $1 trillion deficit.”
Donald Trump is ‘just wrong’
about the economy, says Nobel
Prize-winner Joseph Stiglitz
President Donald Trump told business and political leaders in Davos, Switzerland last week that the economy under his tenure has lifted up working- and middle-class Americans. In a newly released interview, Nobel Prize-winning economist Joseph Stiglitz sharply disagreed, saying Trump’s characterization is “just wrong.”
“The Washington Post has kept a tab of how many lies and misrepresentations he does a day,” Stiglitz said of Trump last Friday at the annual World Economic Forum. “I think he outdid himself.”
In Davos last Tuesday, Trump said he has presided over a “blue-collar boom,” citing a historically low unemployment rate and surging wage growth among workers at the bottom of the pay scale.
“The American Dream is back — bigger, better, and stronger than ever before,” Trump said. “No one is benefitting more than America’s middle class.”
Stiglitz, a professor at Columbia University who won the Nobel Prize in 2001, refuted the claim, saying the failure of Trump’s economic policies is evident in the decline in average life expectancy among Americans over each of the past three years.
“A lot of it is what they call deaths of despair,” he says. “Suicide, drug overdose, alcoholism — it’s not a pretty picture.”
The uptick in wage growth is a result of the economic cycle, not Trump’s policies, Stiglitz said.
“At this point in an economic recovery, it’s been 10 years since the great recession, labor markets get tight, unemployment gets lower, and that at last starts having wages go up,” Stiglitz says.
“The remarkable thing is how weak wages are, how weak the economy is, given that as a result of the tax bill we have a $1 trillion deficit.”
As the presidential race inches closer to the general election in November, Trump’s record on economic growth — and whether it has resulted in broad-based gains — is likely to draw increased attention.
BLOG: THE GREATEST TRANSFER OF WEALTH TO THE RICH OCCURRED DURING THE OBAMA-BIDEN BANKSTER REGIME
“The middle class is getting killed; the middle class is getting crushed," former Vice President Joe Biden said in a Democratic presidential debate last month. "Where I live, folks aren't measuring the economy by how the Dow Jones is doing, they're measuring the economy by how they're doing," added Pete Buttigieg, a Democratic presidential candidate and former Mayor of South Bend, Indiana.
Trump has criticized Democrats for tax and regulatory policies that he says will make the U.S. less competitive in attracting business investment.
“To every business looking for a place where they are free to invest, build, thrive, innovate, and succeed, there is no better place on Earth than the United States,” he said in Davos.
Stiglitz pointed to Trump’s threats last week of tariffs on European cars to demonstrate that turmoil in U.S. trade relationships may continue, despite the recent completion of U.S. trade deals in North America and China.
“He can’t help but bully somebody,” Stiglitz said.
Max Zahn is a reporter for Yahoo Finance. Find hi
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