The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.
Showing posts with label Center on Budget and Policy Priorities. Show all posts
Showing posts with label Center on Budget and Policy Priorities. Show all posts

Friday, August 1, 2014

July Jobs Report...A Sign Of An Improving Economy?

Democrat Party economic policy driven and enacted via the nation's 44th president is paying dividends. Policy, practice, procedure (3Ps) are working!

July 2014

Fifty-Two (52) straight weeks of job growth; a first since 1997! 

In past months, the consistent refrain was: "....but those numbers are low paying insignificant jobs."   Well, the "shark has turned." We are reading reports the July jobs report includes jobs growth in categories consider "Middle class."  I personal find use of the words 'middle class' a convenient media labelNonetheless, I respect efforts to differentiate July jobs from other reports that were infested with "low paying" hires. Media has to reach the ears and brain of the full spectrum of viewers; maybe "middle class" Jobs properly denotes jobs well about minimum wage level jobs.

The following CNN segment includes an indication of July hires at a level that clearly denotes economic improvement.

CNN Christine Romans July Jobs Report

CNN Money- Christine Romans

Twitter Post 
— The White House (@WhiteHouse) August 1, 2014

A much deeper perspective from the Center on Budget and Policy Priorities (CBPP).

Re-posted with permission from the Center on Budget and Policy Priorities

Center on Budget and Policy Priorities

"Today’s solid jobs report shows a labor market that’s moving in the right direction but still has a ways to go before everyone who wants to work has a reasonable chance of finding a suitable job.  Long-term unemployment (more than 26 weeks) remains a particular problem, and Congress dealt the long-term unemployed a harsh blow when it allowed federal emergency jobless benefits to expire prematurely at the end of last year.  Seven months later, long-term unemployment remains higher than when any of the previous seven emergency unemployment programs expired after previous recessions (see chart).  In addition, the share of the population with a job remains well below where it was at the start of the recession.
"Payroll employment growth has picked up in 2014 and the unemployment rate has fallen faster than expected, but weak labor force participation and persistent long-term unemployment continue to plague the jobs recovery.
"To be counted in the labor force, a person must have a job or be actively looking for one.  When jobs are hard to find, more people stop looking or stay home to care for young children, do home repairs, take courses at the local community college, or the like until job prospects improve.  These people are considered 'out of the labor force' rather than unemployed. 
"Over the past year and a half, the decline in the unemployment rate has been nearly entirely offset by a decline in labor force participation (the share of the population aged 16 and over working or actively looking for work).  As a result, the share of the population with a job has barely budged from where it plunged in the Great Recession.  Some of the decline in labor force participation reflects the graying of the population, with more Americans reaching retirement age, but economic research suggests that a significant share of it reflects weak demand for labor in a still-somewhat-sluggish recovery.
"Since the start of the Great Recession, long-term unemployment has been much higher and more persistent than at any other time in data that go back to the late 1940s.  People unemployed 27 weeks or longer still compose roughly a third of the unemployed.  That’s down from a peak of over 45 percent in 2010, but remains higher than the pre-Great Recession peak of 26 percent in 1982 (when overall unemployment was 10.1 percent).  While the long-term unemployment rate of 2.0 percent is below the peak of 2.6 percent immediately after the 1981-82 recession, it’s still considerably higher than the 1.3 percent rate when federal emergency jobless benefits for that recession expired in March 1985.
"People need to start returning to the labor force in greater numbers, and long term unemployment needs to fall much more before we can declare the labor market healthy."
Key points:
  • The unemployment rate edged up to 6.2 percent in July, and 9.7 million people were unemployed.  The unemployment rate was 5.3 percent for whites (0.9 percentage points higher than at the start of the recession), 11.4 percent for African Americans (2.4 percentage points higher than at the start of the recession), and 7.8 percent for Hispanics or Latinos (1.5 percentage points higher than at the start of the recession).
  • Long-term unemployment remains a significant concern.  Roughly a third (32.9 percent) of the 9.7 million people who are unemployed — 3.2 million people — have been looking for work for 27 weeks or longer.  These long-term unemployed represent 2.0 percent of the labor force.  Before this recession, the previous highs for these statistics over the past six decades were 26.0 percent and 2.6 percent, respectively, in June 1983, early in the recovery from the 1981-82 recession.  By the end of the first year of the recovery from that recession, however, the long-term unemployment rate had dropped below 2 percent. 
View the full statement: 3 pp.

Enact a lawsuit or impeach who?

Tuesday, July 15, 2014

US Economy: Jared Bernstein's Testimony Before the Joint Econimc Committee

At five years old, the US economic recovery is finally showing signs of strength, particularly in the job market , where employment growth has accelerated in recent months.  In fact, compared to the last recovery, payrolls have grown considerably faster at this stage, a fact that is more remarkable when one considers how much deeper the “Great Recession” was compared to the very short and mild recession that proceeded the 2000s expansion.  

                                            - Jared Bernstein July 2014

Published with permission from the center on Budget and Policy Priorities.

If you are averse to data, charts, graphs and economic data, consider at least reading the "Conclusion."  Remember, intelligent decisions require information counter to the conservative garbage we see, hear and read on a daily basis. Economic data can be a nation saver. We must remember the GOP would (will) deploy economic policy quite the opposite of Obama Administration.

Testimony of Jared Bernstein, Senior Fellow, Center on Budget and Policy Priorities, Before the Joint Economic Committee

July 15, 2014


Chairman Brady and Vice-Chair Klobuchar, I thank you for the opportunity to assess the current recovery and applaud the committee for taking up this important topic.


The official dates of the last recession are from December 2007 — the peak of the previous recovery — to June 2009 — the trough of the downturn.  Given that we now have at least some economic data through the first half of this year, it is important to assess the progress that’s been made over the first five years of recovery. 
In a review of trends of key variables including real GDP, jobs, unemployment and other measures of labor market slack, my testimony shows the following:
  • Thanks in part to countercyclical policies legislated by Congress in 2009, along with aggressive monetary policy by the Federal Reserve, significant progress has been made in repairing the damage done by the uniquely deep recession that began in late 2007.
  • These gains, while incomplete, are evident in the job market, particularly in the recent acceleration in job growth and decline in unemployment.  After 52 consecutive months of net private sector job growth, non-government employment is up 9.7 million jobs since early 2010. 
  • Moreover, employment growth has accelerated in recent months.  Payrolls added 1.4 million jobs in the first half of this year, their strongest six-month growth period since late 1999.
  • Un- and underemployment are both down significantly over the recovery, as are other slack metrics that rose sharply in the downturn, including long-term unemployment and involuntary part-time work.  While part of the decline in unemployment was due to labor force exits, this negative trend has also stabilized in recent months.
  • Private payrolls grew about 3% faster over the first five years of this recovery compared to the prior recovery, despite the fact that the recession that preceded this expansion was much deeper in terms of lost output and much longer lasting than the downturn that preceded the 2000s expansion.  The private sector added 3.4 million more jobs in the first five years of this recovery than were added in the last one.
  • Yet, slack remains in the job market and wage growth has generally not yet accelerated; real median household income, after falling sharply by around 10% in the downturn, is up about 3% over the past few years, largely due to more work at flat real earnings.  Corporate profitability and financial market returns, on the other hand, have more than recovered their losses.
In other words, while there are many positive attributes to the current recovery, especially in relation to the depth of the recession that proceeded it, it is clearly not yet reaching everyone. 
Looking back at the “Great Recession,” policy actions taken by the Obama administration (as well as the George W. Bush administration) and Congress (fiscal and financial stability policies) and the Federal Reserve (monetary policies) helped to stabilize key markets.  Trends that were sharply negative, like real GDP, employment, or the increase in involuntary part-timers, either stabilized (employment rates) or started to grow (GDP, jobs).  Though these actions have often been cast as ineffective or worse, the evidence points the other way.  In this regard, the quick and forceful actions taken by some members of this committee and your colleagues back in the depth of the Great Recession were essential.
However, since then, factions within this Congress have far too often blocked measures that could have built on this stabilization, like the American Jobs Act or more recently, emergency unemployment compensation.  Worse, Congress has at times imposed self-inflicted wounds on the economy, including the government shutdown, sequestration, and the threat to default on our national debt.  The imposition of these headwinds has blocked progress on growth, jobs, and wages at a time when the opposite was needed.  In fact, many of the same policy makers who today criticize the economic progress I’ll document have at the same time blocked legislative initiatives targeted at improving that progress.  It’s one thing to critically point to the fire yet quite another to do so while blocking the hydrant.
I would thus summarize the message from this testimony as follows: when markets fail as massively as they did in the late 2000s, quick and forceful action clearly helps offset the damage.  But to stop at stabilization, instead of rebuilding jobs and incomes that were lost over the downturn is a serious policy mistake, one that has proven to be extremely costly to working families.  Still, as I conclude below, there is time to build on the recent momentum we’ve seen, particularly in the job market.
The testimony proceeds by briefly reviewing some salient facts about the sharp downturn that proceeded the recovery and the countercyclical policies, most notably the Recovery Act, that targeted this large market failure.  I then look at indicators over the last five years of recovery with an emphasis on the labor market, including jobs, unemployment, the labor force, and wages.  Next, I review policy actions and inactions that have hurt the recovery, largely by creating fiscal headwinds that taken as a whole pushed hard against growth and jobs.  I conclude with some diagnoses and prescriptions to build on the recent progress, measures that I urge the committee to consider in the interest of generating full employment and more broadly shared prosperity.

The Damage Done By the Great Recession

Evaluating this recovery first requires examining the uniquely deep recession that proceeded it.  Real GDP fell 4.3% from peak to trough, more than any other recession on record going back to the Great Depression.  The average percent loss in real GDP in the prior seven downturns going back to the early 1960s was 1.3%.  As officially dated, the Great Recession lasted 18 months, compared to the 10.2 months average length of every other post-war recession.

In the quarter before President Obama took office — 2008Q4 — real GDP declined at a nightmarish annual rate of 8.3%.  Real investment, including businesses and housing, fell by over 30%.  Employment fell by almost two million jobs in the last quarter of 2008 and by more than that — 2.3 million — in the first quarter of 2009.  Home prices — and it was a housing bubble that was at the root of the market failure — were in the midst of what would ultimately be a 34% price decline (Case-Shiller 20-city index).  The S&P 500 fell by half between October 2007 and March 2009.
As noted, the roots of the recession were a massive housing bubble inflated by reckless and under-regulated finance.  Once the bubble burst, the loss of trillions in housing wealth generated a negative wealth effect that sharply reduced consumer spending and ushered in a protracted period of deleveraging of household balance sheets.  In a 70% consumption economy like ours, the negative wealth effect from the loss of something like $8 trillion in housing wealth by itself ensured a deep demand contraction.  In addition, research associated with economists Reinhardt, Rogoff, Koo, and Minsky all point to the particular tenacity of downturns born of underpriced risk in financial markets and the collapse in asset prices that inevitably follows. 
In that regard, the extent to which countercyclical policy took effect, pulling the recovery forward and preventing the recession from becoming a depression was impressive.  As I stress below, these efforts needed to continue longer than they did, but their effectiveness, reviewed next, is a matter of historical record.

The Countercyclical Policy Response

Less than four weeks into his first term, President Obama and Congressional Democrats passed the American Recovery and Reinvestment Act.  A thorough review of the Act goes beyond my subject, which is the recovery that followed.  But since the effectiveness of such policies is key to the later discussion and conclusion, I will note some salient facts regarding the Recovery Act and related policy actions.
The two figures below provide simple but compelling evidence regarding the impact of the Recovery Act and other countercyclical policies in play at the time.  The first figure shows annualized quarterly changes in real GDP and the second shows monthly changes in total and private payrolls.  A vertical line is drawn in February 2009 to show when the Recovery Act was passed.
Read more after the break below

Saturday, April 26, 2014

Medicaid Losers! Doesn't Have To Be You

Does your state governor or state legislature respect your vote?  Do they show any degree of compassion for the elderly and poor who stand to gain from Medicaid Expansion. If you answered "no" to either of the question have a history or inclination to vote GOP, you are showing signs of Albert Einstein's....

You do not have to live as a Medicaid Expansion "loser." 


But, the Medicaid Expansion landscape changed over time.

Medicaid Expansion status 2014.....

Status of state Medicaid expansion decisions as of 2014. (Pew Charitable Trusts)

The Center for Budget ad Policy Priorities (CBPP) w/permission

States’ Very Good Deal on Expanding Medicaid Gets Even Better
April 22, 2014 at 3:51 pm

In a little-noticed finding in last week’s Congressional Budget Office (CBO) report on health reform, CBO sharply lowered its estimates of how much the Medicaid expansion will cost states. We’ve noted repeatedly that the federal government will cover the large bulk of the expansion’s cost. As our new report explains, these new figures make it even clearer that the expansion is a great deal for states.

  • CBO now estimates that the federal government will, on average, pick up more than 95 percent of the total cost of the Medicaid expansion and other health reform-related costs in Medicaid and the Children’s Health Insurance Program (CHIP) over the next ten years (2015-2024).
  • States will spend only 1.6 percent more on Medicaid and CHIP due to health reform than they would have spent without health reform (see chart). That’s about one-third less than CBO projected in February.

Moreover, the 1.6 percent figure doesn’t reflect states’ savings in providing health care for the uninsured, many of whom will now have Medicaid coverage. The Urban Institute has estimated that if all states took the Medicaid expansion, states would save between $26 billion and $52 billion from 2014 through 2019 in reduced spending on hospital care and other services provided to the uninsured.

Related Posts:
The Federal Financial Commitment to the Medicaid Expansion Stands
More Evidence That Medicaid Expansion Makes Fiscal Sense for States
The Growing State Cost of Not Expanding Medicaid StumbleUpon