American Economy Still Hurting from the Recession

By Henry Srebrnik, [Summerside, PEI] Journal Pioneer
 
Some snapshots of an American economy that hasn’t recovered from the Great Recession:

A report issued by the Federal Reserve Board in May found that 46 per cent of Americans said they did not have enough money to cover a $400 emergency expense.

Instead, they would have to put it on a credit card and pay it off over time, borrow from friends or family, or simply not cover it at all.

The U.S. economy is becoming lethal to the less fortunate, according to the National Center for Health Statistics, which reported recently that death rates in the country have risen for the first time in a decade.

The death rate rose to 729.5 deaths per 100,000 people in 2015, up from 723.2 in 2014. Especially noticeable is the rising mortality among working-class whites, particularly those with no more than a high school education. Some of this is due to drug use and suicide.

Carol Graham, a researcher at the Brookings Institution, recently analyzed data on life satisfaction and found that when it comes to their outlook on the future, the most desperate groups are poor and near-poor whites.

There is “a shrinking pie of good jobs for low-skill/blue collar workers,” Graham told the Washington Post.

So while the unemployment rate is falling and some wages are rising, for many that progress isn’t being felt.

Typical is a city like Pottstown, Pennsylvania, where manufacturing has collapsed in the face of foreign competition. Since 1950, the number of jobs in Pottstown has fallen from 12,287 to 9,434, even as the population has held steady at just over 22,000.

The economy has been growing for 84 months, but the pace of this recovery has been the slowest since the Second World War, with average annual growth of about 2.1 per cent. And wages remain stagnant.

In 2007, about 88 per cent of men between the ages of 25 and 54 were working. Now, roughly 85 per cent of such men are working. That’s a difference of about two million men, and most would undoubtedly like jobs.

The explanation, according to New York Times economics writer Binyamin Appelbaum: Job growth is slowing because the economy is losing steam.

“We’ve come a long way from the bottom of 2009,” remarked David Shulman, an economist at the University of California’s Anderson School of Management in Los Angeles.

“But compared to the historical growth track, we’re so far below it that it’s staggering, and that’s the unease the public feels about the economy.”

Census Bureau data shows that real per capita income is still below 2007 levels. And there has been a shift from full-time to part-time employment.

Some 2.5 million full-time jobs have disappeared, to be replaced by part-time employment. So the U.S. economy is really short 10 million full-time jobs.

 “What we see today is a U.S. economy that is great for banks, great for bankers, and not so great for ordinary workers,” writes Salvatore Babones, professor of sociology and social policy at the University of Sydney.

“Employment rates are down, employment hours are down, and wages are down. Bank profits are up, up, up to record levels. It’s no wonder that ordinary people are not as optimistic as the Board of Governors of the Federal Reserve System.”

So despite the nation being in the midst of a so-called recovery, American workers aren’t benefitting. The job market is flat and underemployment remains high, a third of Americans have no emergency savings, and most worry more about their finances than anything else.

In fact, weakened since the 1970s, the American working class has allowed investors to accumulate the lion’s share of wealth. Already by the 1990s, banking regulations had fallen to below pre-1930s levels.

This helps explain the popularity of Donald Trump. Pottstown is just the kind of place where he hopes to win votes.

“Trump actually talks about stuff working people care about, like job-destroying free trade agreements and a deep-rooted fear that the good life (at least for working-class white people) is a thing of the past,” writes Boston University sociologist Nicole Aschoff, managing editor of the left-wing magazine Jacobin and author of The New Prophets of Capital.

Wedded to globalization, the American elite is “so terrified of a Trump presidency” that they prefer Hillary Clinton, she contends.