Tag Archive: Great Recession


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The Economic Collapse

Are You Prepared For The Coming Economic Collapse And The Next Great Depression?

 

JP Morgan And Citigroup Agree That The U.S. Economy Is Steamrolling Toward A Recession

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As we approach the end of 2015, researchers at both JP Morgan and Citigroup agree that the probability that the U.S. economy will soon plunge into recession is rising.  Just last week, a member of the U.S. House of Representatives asked Janet Yellen about Citigroup’s assessment that there is a 65 percent chance that the United States will experience an economic recession in 2016.  You can read her answer below.  And just a few days ago, JP Morgan economists Michael Feroli, Daniel Silver, Jesse Edgerton, and Robert Mellman released a report in which they declared that “the probability of recession within three years” has risen to “an eye-catching 76%”

“Our longer-run indicators, however, continue to suggest an elevated risk that the expansion is nearing its end, and our preferred model now puts the probability of recession within three years at an eye-catching 76%.”

The good news is that the economists at JP Morgan believe that a recession will probably not hit us within the next six months.  But due to steadily weakening economic conditions, they are convinced that one is almost certain to strike within the next few years

“When we first wrote, only manufacturing sentiment was signaling an above-average probability of imminent recession,” they said. “But recent weakening in the Richmond Fed services survey and the ISM nonmanufacturing index have now pushed the nonmanufacturing sentiment probability up somewhat as well.”

In the short term, the note says that the 6-month likelihood is only 5%, but within a year it stands at 23%, in two years 48%, and in three years the “eye-popping” 76%.

To be honest, I believe that this assessment is far too optimistic, and it appears that researchers at Citigroup agree with me.  According to them, there is a 65 percent chance that the U.S. economy will plunge into recession by the end of next year.  Last week, Janet Yellen was asked about this during testimony before Congress

In testimony before Congress’ Joint Economic Committee, Yellen was asked by Rep. Pat Tiberi about a piece of research released by Citigroup’s rates strategy team Monday.

Specifically, Tiberi, an Ohio Republican, wanted to know what Yellen made of Citi’s conclusion that there is a 65 percent chance of a U.S. recession in 2016.

“The economists said that they would assign about a 65 percent likelihood of a recession in the United States in 2016. Now, 65 percent sounds high to me, but I’m not an economist and I’m not the Fed chair. But zero risk might be too low as well. So what would you assign a risk level of a recession next year?” Tiberi asked.

So how did Yellen respond?

 

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American Hunger-Related Healthcare Costs Exceeded $160 Billion in 2014, According to New Study

Food insecurity, especially for children, remains near record high despite the Great Recession’s official end.

BY Elizabeth Grossman

Currently about 50 million Americans meet the USDA criteria for food insecurity. About 15 million of them are children.

While the official end of the Great Recession is a full five years behind us, there are now nearly 12 million more Americans who lack enough resources to access adequate food than there were in 2007, a number that has only improved slightly since United States food insecurity peaked at over 21 percent in 2009. These statistics alone are disturbing. But as detailed in a new study released today as part of Bread for the World Institute’s 2016 Hunger Report, absence of food security in the U.S. carries enormous healthcare costs, more than $160 billion in 2014.

Using data from the U.S. Department of Agriculture (USDA), Census Bureau and research on food security published in peer-reviewed academic journals between 2005 and 2015, a team of researchers led by Boston University School of Medicine associate professor of pediatrics John Cook, estimated these health care costs by looking at the costs of treating diseases and health conditions associated with household food insecurity plus earnings lost when people took time off work because of these illnesses or to care for family members with illnesses related to food insecurity.

As Cook, who is also research scientist and principal investigator with Children’s Health Watch, explained to In These Times, lack of access to adequate food does not necessarily directly cause a particular illness but “plays a role in that disease occurring.” Years of research consistently shows food insecurity increases the risk for a range of health problems. These risks are particularly great for children but poor and inadequate nutrition also increases risk for adult health problems, including obesity and chronic diseases, among them diabetes, hypertension and cardiovascular disease. It also exacerbates illness duration and severity–in some cases simply because people lack money for medication–and therefore treatment costs.

Putting this in a broader economic context, Bread for the World Institute points out that the U.S. “spends more per capita on health care than any other high-income country but compares poorly with these others on key population health indicators such as life expectancy and child survival. This is due,” report authors, “in part to our tolerance as a nation, for higher levels of poverty and hunger.”

Currently about 50 million Americans meet the USDA criteria for food insecurity. About 15 million of them are children. In 2014, 19.2 percent of U.S. households with children were food insecure–about a third higher than households without. The Boston University research team found if the costs of special education for children whose learning abilities are adversely affected by food insecurity are factored in along with related education impacts for high-schoolers, the $160 billion rose by an additional  nearly $18 billion. This brings a total estimate of direct and indirect health care costs of U.S. food insecurity in 2014 to $178.93 billion.

 

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The Economic Collapse

Right Now There Are 102.6 Million Working Age Americans That Do Not Have A Job

The federal government uses very carefully manipulated numbers to cover up the crushing economic depression that is going on in this nation.  For the month of September, the federal government told us that 142,000 jobs were added to the economy.  If that was actually true, that would barely be enough to keep up with population growth.  Sadly, the truth is that the real numbers were actually far worse than that.  The unadjusted numbers show that the U.S. economy actually lost 248,000 jobs in September and the government added more than a million Americans to the “not in the labor force” category.  When I first saw that number I truly believed that it was inaccurate.  But you can find the raw figures right here.  According to the Obama administration, there are currently 7.9 million Americans that are “officially unemployed” and another 94.7 million working age Americans that are “not in the labor force”.  That gives us a grand total of 102.6 million working age Americans that do not have a job right now.

That is not an economic recovery – that is an economic depression of an almost unbelievable magnitude.

This is something that my friend Mac Slavo pointed out the other day.  I encourage you to read his analysis right here.  If we measured unemployment the way that we did decades ago, we would all be talking about how similar Obama’s economy is to the Great Depression of the 1930s.

But instead we let the feds get away with feeding us this completely fraudulent “5.1 percent” unemployment number and most of us believe the mainstream media when they tell us that everything is just fine.

 

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Pro-worker policies have been under attack for a generation, but the last decade has been simply devastating, says report

– Jon Queally, staff writer

In the United States of America the rich get richer, the poor stay poor, and the middle class—if they’re lucky—just stay “flat”.

(Credit: Kokouu/Getty Images) For the last tens years, according to a new report by the Economic Policy Institute, the failure of the economy to provide a living wage to a majority of its workers has created a decade of stagnation.

The central problem, say the report’s authors Lawrence Mishel and Heidie Shierholz, is that “wage and benefit growth of the vast majority” of workers has remained steady—or even declined—amid rising costs of living while the “fruits of overall growth have accrued disproportionately to the richest households” in the country.

“The wage-setting mechanism has been broken for a generation,” write Mishel and Shierholz, “but has particularly faltered in the last 10 years.”

“Corporate profits, on the other hand, are at historic highs,” they continue. “Income growth has been captured by those in the top 1 percent, driven by high profitability and by the tremendous wage growth among executives and in the finance sector.”

The cause of this situation, according to the report, began just as Ronald Reagan was about to be ushered into power in 1979 and is “the result of intentional policy decisions—including globalization, deregulation, weaker unions, and lower labor standards such as a weaker minimum wage—that have undercut job quality for low- and middle-wage workers. These policies have all been portrayed to the public as giving American consumers goods and services at lower prices,” but their real impact has been to cut earning power and upward mobility while making widely shared prosperity an impossibility.

To reverse this trend, the EPI analysis calls for two key policy initiatives. First, a commitment to severely curb unemployment by promoting a new surge in public investment, including a restoration of public services cut during the recent years of recession. And secondly, a national increase in wages across all sectors and the restoration of strong labor protections, including collective bargaining protections for union workers and an increase in the national minimum wage as key components of that effort.

This paper’s other key findings include:

  • According to every major data source, the vast majority of U.S. workers—including white-collar and blue-collar workers and those with and without a college degree—have endured more than a decade of wage stagnation. Wage growth has significantly underperformed productivity growth regardless of occupation, gender, race/ethnicity, or education level.
  • During the Great Recession and its aftermath (i.e., between 2007 and 2012), wages fell for the entire bottom 70 percent of the wage distribution, despite productivity growth of 7.7 percent.
  • Weak wage growth predates the Great Recession. Between 2000 and 2007, the median worker saw wage growth of just 2.6 percent, despite productivity growth of 16.0 percent, while the 20th percentile worker saw wage growth of just 1.0 percent and the 80th percentile worker saw wage growth of just 4.6 percent.
  • The weak wage growth over 2000–2007, combined with the wage losses for most workers from 2007 to 2012, mean that between 2000 and 2012, wages were flat or declined for the entire bottom 60 percent of the wage distribution (despite productivity growing by nearly 25 percent over this period).
  • Wage growth in the very early part of the 2000–2012 period, between 2000 and 2002, was still being bolstered by momentum from the strong wage growth of the late 1990s. Between 2002 and 2012, wages were stagnant or declined for the entire bottom 70 percent of the wage distribution. In other words, the vast majority of wage earners have already experienced a lost decade, one where real wages were either flat or in decline.
  • This lost decade for wages comes on the heels of decades of inadequate wage growth. For virtually the entire period since 1979 (with the one exception being the strong wage growth of the late 1990s), wage growth for most workers has been weak. The median worker saw an increase of just 5.0 percent between 1979 and 2012, despite productivity growth of 74.5 percent—while the 20th percentile worker saw wage erosion of 0.4 percent and the 80th percentile worker saw wage growth of just 17.5 percent.

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Bernard Condon and Paul Wiseman
Associated Press
Thu, 24 Jan 2013 13:48 CST
Job seekers

© Associated Press/Paul Sancya
Job seekers wait in a line at a job fair in Southfield, Mich. In the United States

Five years after the start of the Great Recession, the toll is terrifyingly clear: Millions of middle-class jobs have been lost in developed countries the world over.

And the situation is even worse than it appears.

Most of the jobs will never return, and millions more are likely to vanish as well, say experts who study the labor market. What’s more, these jobs aren’t just being lost to China and other developing countries, and they aren’t just factory work. Increasingly, jobs are disappearing in the service sector, home to two-thirds of all workers.

They’re being obliterated by technology.

Year after year, the software that runs computers and an array of other machines and devices becomes more sophisticated and powerful and capable of doing more efficiently tasks that humans have always done. For decades, science fiction warned of a future when we would be architects of our own obsolescence, replaced by our machines; an Associated Press analysis finds that the future has arrived.

Editor’s Note: First in a three-part series on the loss of middle-class jobs in the wake of the Great Recession, and the role of technology.

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“The jobs that are going away aren’t coming back,” says Andrew McAfee, principal research scientist at the Center for Digital Business at the Massachusetts Institute of Technology and co-author of “Race Against the Machine.” ”I have never seen a period where computers demonstrated as many skills and abilities as they have over the past seven years.”

The global economy is being reshaped by machines that generate and analyze vast amounts of data; by devices such as smartphones and tablet computers that let people work just about anywhere, even when they’re on the move; by smarter, nimbler robots; and by services that let businesses rent computing power when they need it, instead of installing expensive equipment and hiring IT staffs to run it. Whole employment categories, from secretaries to travel agents, are starting to disappear.

“There’s no sector of the economy that’s going to get a pass,” says Martin Ford, who runs a software company and wrote “The Lights in the Tunnel,” a book predicting widespread job losses. “It’s everywhere.”

The numbers startle even labor economists. In the United States, half the 7.5 million jobs lost during the Great Recession were in industries that pay middle-class wages, ranging from $38,000 to $68,000. But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are in midpay industries. Nearly 70 percent are in low-pay industries, 29 percent in industries that pay well.

In the 17 European countries that use the euro as their currency, the numbers are even worse. Almost 4.3 million low-pay jobs have been gained since mid-2009, but the loss of midpay jobs has never stopped. A total of 7.6 million disappeared from January 2008 through last June.

Experts warn that this “hollowing out” of the middle-class workforce is far from over. They predict the loss of millions more jobs as technology becomes even more sophisticated and reaches deeper into our lives. Maarten Goos, an economist at the University of Leuven in Belgium, says Europe could double its middle-class job losses.

Some occupations are beneficiaries of the march of technology, such as software engineers and app designers for smartphones and tablet computers. Overall, though, technology is eliminating far more jobs than it is creating.

To understand the impact technology is having on middle-class jobs in developed countries, the AP analyzed employment data from 20 countries; tracked changes in hiring by industry, pay and task; compared job losses and gains during recessions and expansions over the past four decades; and interviewed economists, technology experts, robot manufacturers, software developers, entrepreneurs and people in the labor force who ranged from CEOs to the unemployed.

The AP’s key findings:

– For more than three decades, technology has reduced the number of jobs in manufacturing. Robots and other machines controlled by computer programs work faster and make fewer mistakes than humans. Now, that same efficiency is being unleashed in the service economy, which employs more than two-thirds of the workforce in developed countries. Technology is eliminating jobs in office buildings, retail establishments and other businesses consumers deal with every day.

– Technology is being adopted by every kind of organization that employs people. It’s replacing workers in large corporations and small businesses, established companies and start-ups. It’s being used by schools, colleges and universities; hospitals and other medical facilities; nonprofit organizations and the military.

– The most vulnerable workers are doing repetitive tasks that programmers can write software for – an accountant checking a list of numbers, an office manager filing forms, a paralegal reviewing documents for key words to help in a case. As software becomes even more sophisticated, victims are expected to include those who juggle tasks, such as supervisors and managers – workers who thought they were protected by a college degree.

– Thanks to technology, companies in the Standard & Poor’s 500 stock index reported one-third more profit the past year than they earned the year before the Great Recession. They’ve also expanded their businesses, but total employment, at 21.1 million, has declined by a half-million.

– Start-ups account for much of the job growth in developed economies, but software is allowing entrepreneurs to launch businesses with a third fewer employees than in the 1990s. There is less need for administrative support and back-office jobs that handle accounting, payroll and benefits.

– It’s becoming a self-serve world. Instead of relying on someone else in the workplace or our personal lives, we use technology to do tasks ourselves. Some find this frustrating; others like the feeling of control. Either way, this trend will only grow as software permeates our lives.

– Technology is replacing workers in developed countries regardless of their politics, policies and laws. Union rules and labor laws may slow the dismissal of employees, but no country is attempting to prohibit organizations from using technology that allows them to operate more efficiently – and with fewer employees.

Some analysts reject the idea that technology has been a big job killer. They note that the collapse of the housing market in the U.S., Ireland, Spain and other countries and the ensuing global recession wiped out millions of middle-class construction and factory jobs. In their view, governments could bring many of the jobs back if they would put aside worries about their heavy debts and spend more. Others note that jobs continue to be lost to China, India and other countries in the developing world.

But to the extent technology has played a role, it raises the specter of high unemployment even after economic growth accelerates. Some economists say millions of middle-class workers must be retrained to do other jobs if they hope to get work again. Others are more hopeful. They note that technological change over the centuries eventually has created more jobs than it destroyed, though the wait can be long and painful.

A common refrain: The developed world may face years of high middle-class unemployment, social discord, divisive politics, falling living standards and dashed hopes.

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In the U.S., the economic recovery that started in June 2009 has been called the third straight “jobless recovery.”

But that’s a misnomer. The jobs came back after the first two.

Most recessions since World War II were followed by a surge in new jobs as consumers started spending again and companies hired to meet the new demand. In the months after recessions ended in 1991 and 2001, there was no familiar snap-back, but all the jobs had returned in less than three years.

But 42 months after the Great Recession ended, the U.S. has gained only 3.5 million, or 47 percent, of the 7.5 million jobs that were lost. The 17 countries that use the euro had 3.5 million fewer jobs last June than in December 2007.

This has truly been a jobless recovery, and the lack of midpay jobs is almost entirely to blame.

 

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