Why Is The Economy So Bad?

The American Dream ^ | May 28 2011

[GonzoII]

Why Is The Economy So Bad?

Millions of Americans have lost their homes, tens of millions of Americans can't find a decent job and 44 million Americans are on food stamps. This is causing an increasing number of Americans to ask this question: "Why is the economy so bad?" There are some Americans that are old enough to remember the Great Depression, but the vast majority of us have never known hard times. All our lives we were told that America was the greatest economy on the planet and that we would always experience endless prosperity in this nation. That was easy to believe because even though we had a recession once in a while, things always bounced back and got even better than ever. But now something seems different. The current economic downturn began back in 2007 and yet here we are in 2011 and there seems to be no end in sight for this economic crisis. So what in the world is going on? Can anyone explain why the economy is so bad?

The following are some of the kinds of questions that the American people are asking about the economy these days....

Why does it seem like it is harder to get a job today than it used to be?

Well, it is because there are far fewer jobs available and far fewer people are getting hired. According to the U.S. Bureau of Labor Statistics, an average of about 5 million Americans were being hired every single month during 2006. Today, an average of about 3.5 million Americans are being hired every single month.

Is there much hope that the unemployment rate will start to decline significantly?

Unfortunately there does not appear to be much reason for optimism. Initial weekly unemployment claims have been above 400,000 for 7 weeks in a row. The "jobs recovery" we have been promised simply is not materializing. Only 66.8% of American men had a job last year. That was the lowest level that has ever been recorded. At the rate we are going things are going to be about the same this year.

So where did all of the jobs go?

They are being sent overseas at a blistering pace. The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001, and the U.S. trade deficit with China is now 27 times larger than it was back in 1990. Amazingly, the United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

Why does it seem like nearly all of the jobs that are available right now are crappy, low paying jobs?

Well, because most of the jobs that are available are crappy, low paying jobs. The following is a brief excerpt from a recent article posted on Tomdispatch.com.....

According to a recent analysis by the National Employment Law Project (NELP), the biggest growth in private-sector job creation in the past year occurred in positions in the low-wage retail, administrative, and food service sectors of the economy. While 23% of the jobs lost in the Great Recession that followed the economic meltdown of 2008 were “low-wage” (those paying $9-$13 an hour), 49% of new jobs added in the sluggish “recovery” are in those same low-wage industries. On the other end of the spectrum, 40% of the jobs lost paid high wages ($19-$31 an hour), while a mere 14% of new jobs pay similarly high wages.

Why are so many Americans afraid to start businesses?

Maybe it is because the overregulation of business in this country has now reached extreme levels. For example, the U.S. Department of Agriculture recently slapped a fine of $90,000 on one family from Missouri because they sold more than $500 worth of rabbits in a single year. The $4,600 in rabbits that they sold ended up netting the family only $200 in profits.

If people are not able to make a decent living, then how are they providing for their families?

Sadly, an increasing number of Americans are simply not able to put food on the table anymore. Today, one out of every eight Americans is on food stamps and one out of every four American children is on food stamps.

For the first time ever, more than a million American homes were repossessed during 2010. So is there any sign that this will turn around in the years ahead?

Sadly, things could get even worse. Today, there are 6.4 million homeowners that are delinquent on their mortgages or in foreclosure. Of those, 675,000 have not made a payment in at least two years.

Will the U.S. housing market ever recover?

Hopefully we will see some sort of a recovery at some point, but right now things don't look good. In April, signed contracts to buy homes fell to a 7-month low. There are 120 million more people in the U.S. than there were in 1963, but home purchases are currently at about half the level they were back then. The truth is that there are dozens of indications that the U.S. real estate crisis may get even worse before things start getting better.

Why does it seem like health care costs so much these days?

Sadly, it is because the entire U.S. health care industry has become a giant money making scam. According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980. Today they account for approximately 16.3%. One study found that approximately 41 percent of working age Americans either have medical bill problems or are currently paying off medical debt. Health care costs continue to increase far faster than the general rate of inflation and so this crisis is going to continue to get worse.

Is "retirement" rapidly becoming a luxury that only the wealthy can enjoy?

According to stunning new research, 54 percent of all American workers plan to keep working after they retire. A different study found that American workers are $6.6 trillion short of what they need to retire comfortably.

Why does it seem like U.S. companies are hiring so many temporary workers?

It is because American businesses are hiring them by the bushel. A whopping 26 percent of all the workers hired in 2010 were temporary workers. That is way, way above historical norms. Temporary workers are far cheaper and much easier to get rid of.

Is the gap between the rich and the poor growing in America?

Yes, it most certainly is. Between 1979 and and 2007, the average household income of the top 1% of Americans soared from $346,600 to $1.3 million. During that same time period the average household income for middle class Americans increased only slightly. At this point, the poorest 50% of all Americans collectively own just 2.5% of all the wealth in the United States.

Does how much money you make tend to alter your view of how well the economy is doing?

Well, according to recent Gallup polling, 46% of those Americans that make less than $30,000 a year believe that we are in a depression right now, while only 23% of those making $75,000 or more believe that we are currently in a depression.

Why do members of Congress seem to care so little about average American workers?

Perhaps it is because 58 percent of the members of Congress are millionaires while only about 1 percent of the general population is made up of millionaires.

So if the economy is in such bad shape why do we still have such a high standard of living?

Sadly, the truth is that we have only been able to maintain our incredibly high standard of living by going into massive amounts of debt. The U.S. national debt is now more than 14 times larger than it was when Ronald Reagan took office. America has become absolutely addicted to government money. Any politician that threatens to reduce government payouts usually gets voted out of office fairly quickly. 59 percent of all Americans now receive money from the federal government in one form or another. U.S. households are now actually receiving more income from the U.S. government than they are paying to the government in taxes. In 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for 18.4% of all income. As long as the American people continue to be addicted to receiving government payouts the federal government will continue to be drowning in debt.

But it is not just the federal government with a debt problem. State and local government debt has reached an all-time high of 22 percent of U.S. GDP. Many state and local governments are even closer to going broke than the federal government is.

U.S. households have been on a debt binge for decades as well. Average household debt in the United States has now reached a level of 136% of average household income.

The truth is that we are a nation that is addicted to debt. We are living in the greatest debt bubble in the history of the world and it was really fun while it lasted.

Unfortunately, the bills are starting to come due and nobody is quite sure how we can possibly pay for all of our mistakes.

We are drowning in debt at the same time that our economic infrastructure is being ripped to shreds. Tens of thousands of factories have closed over the last decade. There is a never ending parade of companies leaving the United States. U.S. workers are having a really tough time competing against slave labor on the other side of the globe. Thanks to "globalization", multinational corporations can hire workers for slave labor wages on the other side of the planet and nobody can stop them.

But if U.S. workers lose their jobs, they go from paying taxes into the system to being a drain on the system. This makes our government debt situation even worse.

Let there be no mistake - America is in economic decline.

So why is the economy so bad?

The truth is that decades of debt and really, really bad decisions are starting to catch up with us.

The economy is a mess right now and things are going to get a whole lot worse.

You better get ready.

[Cringing Negativism Network]

Blah blah blah.

You clearly have a stake in unlimited Chinese imports.

You represent what is wrong.

[Spktyr]

Great, slap on import tariffs. Suddenly the price of everything goes up 100%.

Why?

Because of all the stuff that we cannot make in the US any more. EPA regs mean that a ridiculous amount of capital goods require components, chemicals or treatments in other countries because it’s been banned here.

[Spktyr]

I clearly do?

LMAO!

I support US industry... when it isn’t supporting socialism.

[Rapscallion]

Eliminate every and all tax on American Business. Businesses worldwide will flock here to get the benefit of tax free operation, production, etc. Eliminate all unions and Americans will be hired right and left. We might not even have sufficient population to support the new business cycle. Then enact a rational immigration policy.

MEMO TO NEXT PRESIDENT: Hire me. I will do it. Just step aside and take the credit.

[Spktyr]

Didn’t say it was the only factor. Just saying that it’s equally important as anything else mentioned in the articles.

Also, the unions manage to get themselves at key choke points - Honda, for example, has had problems with unionized US suppliers screwing things up.

[mo]

DC continues to do it wrong....here’s a link to how to do it right.

“Warren G. Harding cut government 50% and ended the Depression of 1920-21 in the shortest time span in history.”

http://www.thelandofthefree.net/conservativeopinion/2011/05/19/gdp-versus-debt/

[Cringing Negativism Network]

“Great, slap on import tariffs. Suddenly the price of everything goes up 100%.”

-

Correction: suddenly the price of everything imported goes up 100%.

Works for me. That incents making things right here in America. No government meddling needed.

Just market forces.

[Yet_Again]

Then enact a rational immigration policy.

A rational immigration policy in a country with 10%-15% unemployment involves catching and deporting all illegals and slamming the door shut on all potential immigrants who do not come bearing a $1,000,000 or more with an intent to start a local business. Oh, if I want to go to Canada or New Zealand to live as an American, that is the litmus test I'll have to pass...There are many places in the world that the price tag is quite a bit higher than $1,000,000.

[Spktyr]

No, it doesn’t.
See my other post. Even if you were correct, we would NOT be able to make those goods here due to EPA regulations.

Case in point is Glock, who does make firearms in the US. The Tenifer finish on their pistols is not especially dangerous or hazardous to apply and it’s non-toxic after it’s on - but they cannot apply it here because it is banned by the EPA. Their slides are brought in from Austria, where the finish is applied.

So, let’s say your tariffs come in. Glock (and others) needing this type finish on their products will still have to get their stuff imported because it will still be illegal.

All you have done is made everything more expensive without adding jobs, factories, or benefit to the economy.

[Zeddicus]

Only one word is needed to answer this question:
0bama.

This is a ridiculous oversimplification of the problem. Our problems today are the cumulative result of 30 years of horrible economic policy and debt intoxication, and it is the result of Presidents and Congresses of BOTH PARTIES. Shoot, the main reason Social Security is such a bankrupt disaster now is the "reform" that Reagan signed, but nobody ever talks about that.

Yeah, Obama is a full-blown Marxist and is pouring gasoline on the fire, but he sure as heck didn't start the fire.

[Yet_Again]

You have half the answer. Cutting government bureaucracy will make America a friendlier business climate, but it will not address the main cost of doing business here...labor that is (regardless of skill set or education) roughly 1000% or so more costly than it is in the third world. Only cutting government in this sort of an environment will merely add government workers to the unemployment line without stimulating local business.

Import tarriffs to account for this vast wage disparity are a critical element to a real solution.

[Cringing Negativism Network]

Everything is always so complex and theoretical with you “free traders”.

That is why, our solution needs to be simple.

One flat, no exceptions, no loopholes, 100% import tariff on everything not made right here.

Could not be simpler. Let’s stop this disaster and bring jobs back to the United States of America. Keep our own food right here in America.

Keep our own dollars right here in America.

We’ve seen your way. It’s why we’re collapsing.

[Sprite518]

Real Simple.... Because the Powers TO Be want it this way...

[Spktyr]

Uh... Nothing theoretical about it. That will really happen. It happened in the past when tariffs were placed on Japanese automobiles coming in to this country. It didn’t stop them, and it just made cars more expensive.

How much simpler do I have to make it? US products, due to EPA BULLCRAP, now often have many critical parts that simply cannot be legally made here!!!!! You pass that tariff, you make all those US products 100% more expensive!

What’s not to understand?

[RoadTest]

We have to get Bozo-And-The-Freeloader out of the White House.

[Cringing Negativism Network]

Enough talk.

Import tariffs. Now.

[Vaduz]

Boeing wanted to open a factory in S.C. but the union and the feds said nope you can’t do it,however feel free to build it in another country.
Thank You card can be sent to Obama&Co.

[Yet_Again]

You pass that tariff, you make all those US products 100% more expensive!

Only in a world where all US products are imported. What a tarriff does is disincentivize business to replace first world labor with third world labor by eliminating the profit margin that such a move allows. Oh, and the union/administration position on the Boeing plant in S.C. is dead wrong.

[screaminsunshine]

GOP and Democrat Big Government and Globalism.

[screaminsunshine]

Will you admit it is Obama and the GOP? Maybe when they GOP helps raise taxes and calls it Revenue Enhancement you will understand.