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Economy Recovery Depends Upon Your Vantage Point

Carl Bloice: Like the knee bone and the thigh bone, the foreclosure crisis is closely related to the jobs crisis. Last week the Obama administration cautioned the public not to expect any dramatic improvement in the jobless rate, largely because thousands of formerly “discouraged” jobless workers sense the situation is improving and have started back looking for work. As a result, some economists have suggested, the jobless rate may well go beyond the 9.7 percent where it stands now.
richard trumka

AFL-CIO President Richard Trumka

“Why So Glum?” Floyd Norris asked on the front page of the New York Times. After all, he wrote, the “Numbers Point to a Recovery.” “The American economy appears to be in a cyclical recovery that is gaining strength. Firms have begun to hire and consumer spending seems to be accelerating,” he said in his April 8 essay. “Why is good news being received with such doubt? Why is ‘new normal’ the currently popular economic phrase, signifying that growth will be subpar for an extended period, and that the old normal is no longer something to be expected?

“It is possible, of course, that I am wrong and the prevalent pessimism is correct,” Norris continued. “Many economic indicators, including Thursday’s retail sales report, are looking up, but that does not prove the recovery will be self-sustaining. There are issues relating to over-indebted consumers and local governments. The housing collapse will have an impact for some time.”

Norris went on to discuss “a number of reasons for the glum outlook that are unrelated to the actual economic data.” Most of it political; the Republicans don’t want to admit anything good has happened since President Obama took over the Oval Office. The Democrats, on the other hand, “would love to give the president credit” but much of the party “wants another stimulus bill to be passed, notwithstanding worries about budget deficits. Chances for that are not enhanced by the perception the economy is getting better.”

Could be. But I suspect there is another more compelling reason while the country resists putting on a happy face. The selected statistics don’t jibe with what we see around us.

I say selective because the same day Norris asked his question it was reported that the number of U.S. workers filing new claims for jobless benefits rose 18,000 the previous week and the figure for the week before that had been revised from week before that to 442,000 from 439,000. Although the number of people continuing to claim benefits for more than a week fell by 131,000 to 4.55 million, the lowest level since December 2008, as the Times reported it, “That figure does not include millions of people who have used up the regular 26 weeks of benefits typically provided by states, and are receiving extended benefits for up to 73 additional weeks, paid by the federal government.”

About 5.8 million people are now receiving extended benefits.

“Floyd Norris urges Americans to be more optimistic about the hopes for economic recovery, yet I am loath to follow his advice until I start to see a recovery around me,” Julie Endrizzi of Scarborough, Maine, commented in a letter to the editor last Saturday. “An unemployment rate of 9.7 percent means that most of us know at least half a dozen people who have been devastated by the recession.”

“The figures from the Bureau of Labor Statistics and the ensuing debate come every month, but every day I hear stories about friends and family members who realize that they have no choice but to go on Medicaid or move back with parents,” wrote Endrizzi. “They watch as their chances of getting a good job fade into the distance as the gap on their résumé grows. For the sake of all of these people, we cannot look at these numbers, wipe our hands and proclaim the job done.

I will be optimistic when my loved ones start seeing tangible changes.”

Norris appears to be quite right about one thing: the housing collapse will have an impact for some time. A total of 2.8 million households were in some stage of foreclosure last year, and the number is slated to increase to between 3 and 3.5 million. In the last quarter of 2009 about 1.1 million homes were threatened with foreclosure, a year later it was 1.7 million. The number is “likely to keep rising through the middle of next year or later,” said Mark Fleming, chief economist of the real estate research firm First American CoreLogic, told the Times.

“We’re going to be dealing with high levels of distressed (sales) in the marketplace for at least a couple of years,” Fleming said. “It’s not just all going to disappear.”

Like the knee bone and the thigh bone, the foreclosure crisis is closely related to the jobs crisis. Last week the Obama administration cautioned the public not to expect any dramatic improvement in the jobless rate, largely because thousands of formerly “discouraged” jobless workers sense the situation is improving and have started back looking for work. As a result, some economists have suggested, the jobless rate may well go beyond the 9.7 percent where it stands now.

The Economic Policy Institute says the return of the discouraged is a hopeful sign but according the Times, “Some economists say the jobless rate will not recede to pre-recession levels near 5 percent for four more years.”

Nothing in these figures seems to suggest there is any real reason for optimism concerning the rest of this year. The employment situation has been up front in the public’s consciousness, and will remain so.

It seems to me that there is not much public appreciation for the awfulness of the foreclosure crisis. It’s mostly under the radar that millions of working class people are being rendered homeless. That’s no exaggeration. And nobody is even talking about homelessness and the continuing rise in poverty.

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Growing numbers of adults and families who have lost houses to foreclosure are ending up in homeless shelters. According to a report “Foreclosure to Homelessness 2009,” compiled by the National Coalition for the Homeless and six other advocacy groups, in the past, foreclosures were not a significant cause of people becoming homeless. However, over the past year, of the homeless people being served by social service agencies, an average of 10 percent lost homes to foreclosure. In an April 1, 2010 report examining homelessness among elderly people, the National Alliance to End Homelessness projects an increase in the number of elderly people experiencing homelessness in the decades to come. The group predicts the elderly homelessness population will increase by 33 percent by 2020 and more than double by 2050.

A disproportionate number of those facing foreclosure are African American, Latino and Asian and 49 percent of the homeless are African American.

African-American unemployment rose to 16.5 percent last month, up from 15.8 percent in February and 13.5 percent in March of 2009. The jobless rate for Black men in March was 19 percent, up from 17.8 percent last month and 16.4 percent 2009. The unemployment rate for Black women in March was 12.4 percent. Of African-Americans 16-19 years old, 41.1 percent are out of work as against 23.7 percent for teenagers as a whole. Some economists are predicting an African American unemployment rate somewhere in the neighborhood of 17.2 percent in a couple of months.

Last Sunday, the Associated Press reported: “The election-year jobs agenda promised by President Barack Obama and Democrats has stalled seven months before voters determine control of Congress. Democrats have no money to pay for the program. That’s because both Republicans and the Democratic chairman of the Senate Budget Committee objected to taking money left over from the fund that bailed out banks, automakers and insurers and using it for the jobs bill.”

The story went on, “An $80 billion-plus Senate plan promised an infusion of cash to build roads and schools, help local governments keep teachers on the payroll, and provide rebates for homeowners who make energy-saving investments. Two months after the plan was introduced, most of those main elements remain on the Senate’s shelf.

“…What’s going ahead instead are more modest initiatives. That includes some help for small business or simple extensions of parts from last year’s economic stimulus measure. None is expected to make an appreciable dent in an unemployment rate, stuck at 9.7 percent.”

“Even legislation to help the jobless has run into trouble,” said the story.

One of the he most hopeful developments in the campaign for a meaning jobs program has been the stance of labor movement – especially the new leadership of the AFL-CIO. I was intrigued by AFL-CIO President Richard Trumka’s recent powerful remarks to a group of liberal academics. “Mass unemployment and growing inequality threaten our democracy, he told the Institute of Politics at Harvard Kennedy School. “We need to act - and act boldly - to strike at the roots of working people’s anger and shut down the forces of hatred and racism.” He went on:

“We have to begin the conversation by talking about jobs-the 11 million missing jobs behind our unemployment rate of 9.7 percent.

“Now, you may think to yourself, that is so retro. Jobs are so twentieth century. Sweat is for gyms, not workplaces.

“For a generation, our intellectual culture has suggested that in the new global age, work is something someone else does. Someone we never met far away in an export processing zone will make our clothes, immigrants with no rights in our political process or workplaces will cook our food and clean our clothes.

“And for the lucky top 10 percent of our society, that has been the reality of globalization-everything got cheaper and easier.

“But for the rest of the country, economic reality has been something entirely different. It has meant trying to hold on to a good job in a grim game of musical chairs where every time the music stopped there were fewer good jobs and more people trying to get and keep one. Over the last decade, we lost more than 5 million manufacturing jobs-a million of them professional and design jobs. We lost 20 percent of our aerospace manufacturing jobs. We’re losing high-tech jobs-the jobs we were supposed to keep.”

“When it comes to creating jobs, some in Washington say: Go slow-take half steps, don’t spend real money,” said the former Mine Workers Union president. “Those voices are harming millions of unemployed Americans and their families - and they are jeopardizing our economic recovery. It is responsible to have a plan for paying for job creation over time. But it is bad economics and suicidal politics not to aggressively address the job crisis at a time of stubbornly high unemployment. In fact, budget deficits over the medium and long term will be worse if we allow the economy to slide into a long job stagnation - unemployed workers don’t pay taxes and they don’t go shopping; businesses without customers don’t hire workers, they don’t invest and they also don’t pay taxes.”

Carl Bloice

Crossposted with permission from The Black Commentator.