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.

[central_va]

And thanks to unions,

BS, there are more right-to-work states than there are union states. The companies moving overseas are for the most part PROFITABLE NON-UNION companies who wan to make a few pennies more on the dollar by selling out. The union thing isn't working anymore, Free Traders need a new one.

[GregoryFul]

Bernanke sure believes it and seems to be going to the other extreme by constantly increasing the money supply with easy money.

So how's that working for ya?

[Cringing Negativism Network]

We’ll not recover from de-industrializing America, if we don’t.

If we’re going down, might as well be fighting.

[central_va]

I’d advocate 100%.

I like your plan on tariffs, but lets be sneaky about like the Free Traders are sneaky. We'll start our tariff at a benign 10%. Then, we will increase it 10% per year, slowly turning up the heat.

PS We will EXCLUDE energy imports just to piss off the greeniacs.

[Cringing Negativism Network]

I propose a new term, mostly in jest:

“TINO”.

Tariffs in name only. :)

[I still care]

Because we forgot America is different than the rest of the world.

We are playing with socialistic fire.

[GregoryFul]

Freedom to create, innovate, employ, experiment, invest, enjoy the fruits of same, were the engines that brought America to the wealthiest nation in history. many of our people, and clearly our government, has abandoned those policies - and until they are reinstated, this country is doomed.

Tariffs on imports will speed the demise to an even more blistering pace. Check out what higher oil prices do to our economy - and multiply by 100.

[Brilliant]

Two words: “Big Government.”

And even though the growth numbers for GDP have been positive, that’s misleading because the growth has come primarily in the governmental sector, where there is no market mechanism to authenticate the value of the spending. You can spend a trillion dollars digging holes in the ground, and that adds a trillion dollars to the GDP.

[Cringing Negativism Network]

We lit the match of that fire, when we began sending what was once referred to so proudly as the “Arsenal of Democracy” to history’s largest communist nation, simply to enrich a small circle of powerful people, of questionable national loyalty, motivated only by greed.

There’s a name for that sort of thing.

[central_va]

Tariffs crumpled the economy into a decade of depression in the 1930's. And it will not work now.

More Free Trader propaganda, tariffs HAD NO EFFECT on the depression.

Imports during 1929 were only 4.2% of the United States' GNP and exports were only 5.0%. Monetarists such as Milton Friedman who emphasize the central role of the money supply in causing the depression, downplay the Smoot-Hawley's effect on the entire U.S. economy.[20]

[Will88]

So how's that working for ya?

Different times and different economic problems, and different causes.

But you are posting total nonsense when you say that tariffs were some significant part of the GD. Read something and learn what really happened.

[bert]

———which Americans are overpaid -——

The market makes that determination. Generally, those who make products that can not be sold at a profit

[central_va]

The purpose of business, that is capitalism, is to make money, not provide wages to over paid workers.

Destroying our industrial base so your 20K car costs 19.5K is not free trade - it's national suicide. It's memorial day weekend. So all of our guys fighting and dying, if you could somehow ask them if Free Trade was a good idea and destroying our manufacturing base in the process was a good idea, HOW DO YOU THINK THEY WOULD ANSWER?

Dealing in Chinese slave labor is NOT CAPITALISM.

[GregoryFul]

Right now China is giving us stuff for a lot less than the value of the $'s we are sending to China (basically quickly depreciating paper, in itself a big darn problem, but they still can buy gold, silver, iron, copper, other commodities, etc., with it). So far, so good. When they decide not the accept paper $'s for goods, you've got your wished for tariff, or the mega equivalent of, and this economy will crumple, and the people, will convulse - I think in less than a year or two.

Evidence: Take a look at the violent and continuous down trend in the value of the $ internationally - real world stuff, not pipe dream nonsense. Take a look at bond buyers striking against buying any more US Treasury debt. Check out S&P's opinion on the risk of owning US paper, etc.

If you think we have it bad now, just wait a bit. So stock up on goods from China, while they are still a bargain.

[Cringing Negativism Network]

That’s the problem.

If we wait to impose tariffs, China will simply charge us more, and we’ll get no benefit.

At least tariffs will apply toward our budget deficit.

[Will88]

The market makes that determination.

Lol, not really. The thing that determines that these days is whether or not a job can be moved to cheap labor nations and the work product, whether a manufactured product or an intellectual product, can then be shipped or transmitted back to the US.

Whether a job can be moved, and government intervention; that determines everything these days, not some fantasy market forces at work.

But, even if many aren't honest enough to admit it, everyone who earns their living in the USA is overpaid compared to global averages, including you if you work in the USA in any capacity.

It is totally dishonest and self-serving to deny that fact. And your fantasy free market will never exist until labor of all types is just as free to move across borders as capital.

Do you favor the total free movement of labor to bring about a genuine free market?

[GregoryFul]

But you are posting total nonsense when you say that tariffs were some significant part of the GD.

Glad you are so positive - experts differ on that. In my opinion the resulting trade wars so disrupted an already suffering economic system, it was crumpled by stupid interventions like "lets make commerce more difficult and expensive. Ya, that's the ticket!"

[Scotsman will be Free]

I disagree. Across the board tariffs will simply increase everyone’s costs.

[JohnLayden]

Too bad the facts don’t support most of the assumptions in this debate.

1. The US has been losing manufacturing jobs since the peak in July of 1979. But industrial output has continued to grow faster than the rest of the world.
2. During the decade when we were “exporting 50k manufacturing jobs per month” China lost 15% of their manufacturing jobs.
3. The industrial nations lost 32 million manufacturing jobs in a decade. But industrial output has continued to grow up until the recession.
4. These jobs aren’t being exported, they’re just going away. Labor has become so expensive and risky that capital investment to automate is more attractive.
5. As regulation makes capital investment less attractive, the capital will move elsewhere.
6. Tariffs don’t work. In the 10 years after NAFTA the US saw the largest surge in manufacturing jobs in 50 years. So did Canada and Mexico.

[bert]

The primary flaw in your thinking is the concept of Chinese Slave Labor. The labor is made by those who desire to exit the oppressive poverty of the countryside and improve the quality of their lives.

You might spend a few minutes reading about the growth of all things Chinese and the return of pure, raw entrepreneurial personal initiative into the Chinese economy.

The old style oppression is severely diminished and business is rushing to the forefront.