economic snapshot for march 2012

8/2/2019 Economic Snapshot for March 2012

1/5


2/5

2 Center or American Progress | Economic Snapshot rom March 2012

2. Competitiveness grows at slow pace.Worker produciviyhe amoun o goods

and services produced in an hour o work in he nonarm business economyis

a key measure o he economys global compeiiveness. I increased by 0.9 per-

cen in he ourh quarer o 2011, deceleraing rom 1.8 percen growh in he

previous quarer. Produciviy now sands 6.6 percen larger han in December

2007, a he sar o he Grea Recession, bu well below he average increase o

7.9 percen or similar periods in he pas.2

3. The labor market recovery continues. Te economy has added jobs coninuously

since Ocober 2010 and had 2.2 million more jobs in February 2012 han in June

2009, when he economic recovery sared. he privae secor has added 2.8 million

jobs during his period.3 Te dierence beween he ne gain and privae-secor

gain is explained by he loss o 590,000 sae and local governmen jobs, as budge

cus reduced he number o eachers, bus drivers, reghers, and police ocers,

among ohers.4 Job creaion is a op policy prioriy since privae-secor job growh

is sill oo weak o overcome oher job losses and o improve he economic orunes

o Americas middle class.

4. Suffering of the unemployed stays high. Teunemploymen rae sood a 8.3 percen in

February 2012. long-erm unemploymen has

ballooned in recen years as he unemploymen

rae sayed high. In February 2012, 42.6 percen

o he unemployed were ou o work and look-

ing or a job or more han six monhs. Te

average lengh o unemploymen sayed high

a 40 weeks in February 2012.5

Te long-ermunemployed are sill sruggling, even as privae-

secor job creaion acceleraes, since here are

sill millions o unemployed workers vying or

he newly creaed jobs. (see Figure 1)

5. Labor market pressures fall especially on

communities of color, young workers, and

those with less education. Te Arican

American unemploymen rae in February

2012 sayed well above average a 14.1

percen, and he Hispanic unemploymen rae sayed high a 10.7 percen, while

he whie unemploymen rae was 7.3 percen. Youh unemploymen sood a a

high 23.8 percen. And he unemploymen rae or people wihou a high school

diploma sayed high a 12.9 percen, compared o 8.3 percen or hose wih a high

school diploma and 4.2 percen or hose wih a college degree.6 Vulnerable groups

have sruggled disproporionaely more amid he weak labor marke han whie

Figure 1

Share of long-term unemployment, business cycle averages

Average weeks of unemployment

Business cycle start

6.8%9.0%

13.8%

10.4%9.0%

12.3%14.8%

15.9%18.7%

34.8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Dec-48 Aug-53 Sep-57 May-60 Jan-70 Dec-73 Feb-80 Aug-90 Mar-01 Dec-07

Source: Bureau of Labor Statistics, Current Population Survey (Department of Labor, 2011).


3/5


workers, older workers, and workers wih more educaion. Bu even hose groups

ha are beter han heir counerpars in he weak labor marke suer remen-

dously rom high and long-erm unemploymen.

6. Household incomes continue to drop amid prolonged labor market weaknesses.

Median infaion-adjused household incomehal o all households have more

and he oher hal has lesssood a $49,445 in 2010, is lowes level in infaion-adjused dollars since 1996. I ell by 2.3 percen in 2010, an acceleraed decline

aer median income dropped by 0.7 percen in 2009. American amilies saw ew

gains during he recovery beore he crisis hi in 2008 and have experienced no

income gains during he curren economic recovery aer 2009.7

7. Income inequality on the rise.Households a he 95h percenile, wih incomes o$180,810 in 2010, had incomes ha were more han nine imes9.04 imes, o be

exache incomes o households a he 20h percenile, wih incomes o $20,000.

Tis is he larges gap beween he op 5 percen and he botom 20 percen o

households since he U.S. Census Bureau sared keeping record in 1967.8

8. Poverty continues to rise across a wide spectrum. Te povery rae rose o 15.1

percen in 2010is highes rae since 1993. Te Arican American povery rae was

27.4 percen, he Hispanic rae was 26.6 percen, and he whie rae was 9.9 percen

in 2010. Te povery rae or children under he age o 18 sood a 22 percen. More

han one-hird o Arican-American children (39.1 percen) lived in povery in 2010,

compared o 35 percen o Hispanic children and 12.4 percen o whie children.9 Te

prolonged economic slump, ollowing an excepionally weak labor marke beore he

crisis, has aken a massive oll on he mos vulnerable populaions.

9. Employer-provided benefits continue to disappear. Te share o people wih

employer-provided healh insurance dropped rom 59.8 percen in 2007 o 55.3 per-

cen in 2010.10 And he share o privae-secor workers who paricipaed in a reire-

men plan a work ell rom 42 percen in 2007 o 39.5 percen in 2010.11 Families

hus have less economic securiy han in he pas due o less access o key employ-

men-based benes, requiring more privae savings o make up he dierence.

10. Family wealth losses linger. oal amily wealh is down $14.4 rillion (in 2011

dollars) rom June 2007is las peako December 2012. Home equiy says

low, such ha homeowners on average sill own only 38.4 percen o heir homes,

wih he res owed o banks.12 Households, already sruggling wih low incomes in a

weak labor marke, consequenly eel growing pressures o save more and consume

less. Te dual burden o low income and decimaed household wealh pus he

brakes on consumer spending, holding back economic and job growh.


4/5


Figure 3

Share of mortgages that are delinquent or in foreclosure

11. Households are burdened by large debt

levels.oal household deb equaled 112.8percen o aer-ax income in December

2011. Tis is down rom a record high o

130.2 percen in Sepember 2007, bu sill

higher han a any poin beore March 2004.13

Te unprecedened decrease in householdindebedness since he crisis began resuled

rom a combinaion o acorsigh lending

sandards, alling ineres raes, and massive

oreclosuresha are slowly abaing, sug-

gesing ha urher decreases in household

indebednessdeleveragingwill also slow,

unless incomes rise aser han hey have in he

pas. High household deb will hence con-

inue o slow economic growh in he uure as

households ocus on saving more, raher hanon spending more. (see Figure 2)

12. The housing market remains depressed. New

home sales oaled 313,000 in February 2012,

up slighly rom a low annual rae o 307,000

in December 2011, bu he median house

price in February 2012 was 6.2 percen lower

han a year earlier.14Exising home sales wereup by 8.8 percen in February 2012 rom a

year earlier, and he median price or exis-ing homes was up by 0.3 percen during his

period.15 Despie some improvemen he

housing marke and hence consrucion and

he economy are held back by high unemploy-

men and crushing household deb burdens.

13. Financial distress is widespread among fami-

lies. One in eigh morgages is sill delinquen

or in oreclosure, even hough morgage

roubles have been gradually easing since March 2010. Te share o morgages

ha were delinquen was 7.6 percen in he ourh quarer o 201, and he share o

morgages ha were in oreclosure was 4.4 percen a he same ime.16 High unem-

ploymen coupled wih massive wealh losses has pushed many amilies o delay or

even deaul on morgage paymens. Tis household economic disress reverberaes

across he economy as banks are nervous abou exending new morgages, prolong-

ing he economic slump. (see Figure 3)

Figure 2

Household debt to after-tax income, 1952 to 2011

Mar-52

Mar-67

Mar-82

Mar-97

Mar-12

Percent of after-tax income

0%

20%

40%

60%

80%

100%

120%

140%

Source: Calculations based on Board of Governors, Federal Reserve, 2011, Flow of Funds Accounts of the United

States, Washington, D.C.: BOG.

Foreclosures Delinquencies

0%

2%

4%

6%

8%

10%

12%

Mar-79

Mar-84

Mar-89

Mar-94

Mar-99

Mar-04

Mar-09

Source: Mortgage Bankers Association, 2011, National Delinquency Survey, Washington, DC: MBAA.


5/5


1 All GDP data are rom the Bureau o Economic Analysis,National Income and Product Accounts (2011). Investmentgrowth is expressed as year-over-year change, rather than themost recent quarterly change by itsel, as quarterly invest-ment data can be more volatile than consumption data.

2 Calculations based on Bureau o Labor Statistics, Outputper Hour ( Business cycle dates are taken rom National Bu-reau o Economic Research, Business Cycle Dates See also

Adam Hersh and Christian Weller, Productivity Snapshot(Washington: Center or American Progress, 2012) or moredata on U.S. competitiveness.

3 The discussion here ocuses on private-sector job creationsince private-sector employment is vastly larger than pub-lic-sector employment and since public-sector employmentuctuated widely in 2010 due to temporary hiring associ-ated with the 2010 Census. The private-sector employmentnumbers thus oer a more accurate picture o the health othe labor market than the total nonarm payroll numbers.

4 Employment growth data are calculated based on Bureau oLabor Statistics, Current Employment Statistics (2011). TheCurrent Employment Statistics are also known as the payrollsurvey.

5 Unemployment numbers are taken rom the Bureau o LaborStatistics, Current Population Survey (2011). The CurrentPopulation Survey is also known as the household survey.

6 Unemployment rates by demographic characteristics aretaken rom the Bureau o Labor Statistics, Current Popula-tion Survey (2011). The Current Population Survey is alsoknown as the household sur vey.

7 Data or amily incomes are rom the U.S. Census, Income,Poverty, and Health Insurance Coverage in the UnitedStates: 2010 (2011). This report is occasionally reerred to asthe poverty report.

8 Other measures o income dispersion also show a growinggap between amilies in the top 5 percent, top 10 percent,and top 20 percent, relative to amilies in the bottom 20percent and bottom 50 percent. See U.S. Census, Income,Poverty, and Health Insurance Coverage in the UnitedStates: 2010 (2011).

9 Data or poverty rates are rom the U.S. Census, Income,Poverty, and Health Insurance Coverage in the UnitedStates: 2010 (2011). This report is occasionally reerred to asthe poverty report.

10 Data or health insurance are rom the U.S. Census, Income,Poverty, and Health Insurance Coverage in the UnitedStates: 2010 (2011). This report is occasionally reerred to asthe poverty report.

11 Craig Copeland, Employment-Based Retirement Plan Par-ticipation: Geographic Dierences and Trends: 2010/2007(Washington: Employee Benefts Research Institute,2011/2008).

12 Wealth calculations are based on the Board o Gover-nors, Federal Reserve System, Release Z.1 Flow o FundsAccounts o the United States (2012). Real wealth is thenominal wealth deated by the price index or the PersonalConsumption Expenditure index. The Personal Consump-tion Expenditure index is rom the Bureau o EconomicAnalysis, National Income and Product Acco unts (2012).

13 Debt calculations are based on the Board o Governors, Fed-eral Reserve System, Release Z.1 Flow o Funds Accountso the United States (2012). Debt levels are the ratio o thenominal debt levels divided by the nominal disposablepersonal income. Debt reers to total credit instruments.

14 U.S. Census Bureau, New Residential Sales Historical Data(2012).

15 National Association o Realtors, December Existing-HomeSales Show Up trend (2012).

16 Data are taken rom the Mortgage Bankers Association, National Delinquency Sur vey (2011).

Endnotes

economic snapshot for march 2012

Documents