The Economic Crisis--Reasons For Optimism?

A friend told me yesterday that he’s optimistic about the economy, that the worst is over, that state budget cuts won’t hurt too much and that our governor will jump in at the last minute if the economic forecast is bleak and save the day so that he can get a ride to Washington. Warren Buffet is optimistic, after all, so what’s wrong with me?

Well, April marked 16 months of what is still optimistically being called a recession, matching the longest economic downtown since the Great Depression. Bureau of Labor Statistics numbers showed that 539,000 jobs were lost in April. An optimist or a drunk might compare that to the average of 707,000 jobs lost per month in the first quarter of 2009 and be happy, but that’s whistling past a graveyard.

Massive hiring for the 2010 census, other government jobs and healthcare accounted for a small growth in the labor market in April. Meanwhile, the private sector cut 611,000 jobs and private sector job loss was actually 69,000 jobs greater than what was reported in March. That brought the official unemployment rate to something like 8.9%. Applications for unemployment benefits may be slowing, but this may be due to unemployment increasing in states where filing and waiting periods are extended, increases in part-time employment or workers dipping into pensions and savings.

We‘ve lost millions of jobs in the last sixteen months. Something like 5.2% of private sector jobs are now gone. In order to support everyone and keep things moving as normal in this capitalist society we should be adding 127,000 jobs every month instead. We’re something like 7.8 million jobs below what we need in place right now. Official US unemployment is now at 13.7 million.

Hourly wages are indeed increasing, but the numbers of hours we’re working are decreasing and there aren’t as many people working and enjoying these increases, however slight they may be. Cost increases like the twenty-cent increase in gas prices is hurting most workers I know.

Unemployment is at least 15 per cent among Black workers, 11 per cent among Hispanic workers and 8 per cent among white workers. Having that college degree helps—unemployment among people with paper is at 4.4%--but unemployment here is still at its highest point since 1979.

My friend said that the stimulus spending is either putting people back to work or stopping layoffs—he may be right, generally speaking, if we’re only talking about Oregon—but the Recovery Act was only ever expected to create or hold on to between three or four million jobs.