Job Market Recovering

 Popular Economics Weekly

“Total nonfarm payroll employment increased by 172,000 in May, and the unemployment rate was unchanged at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in leisure and hospitality, local government, and health care. Employment in financial activities declined.” BLS

FREDpayrolls

The job market is finally recovering, after almost no job growth last year. The recovery is brutal, per the head spinning FRED payroll graph above; -149,000 jobs were lost in October 2025 and -156,000 jobs were lost as recently as February 2026 before recovering in March (+214,000 jobs), April (+179,000 jobs), and now May (+172,000 jobs).

The sudden hiring surge is because manufacturing has rebounded; both from the Biden administration’s $5 trillion raised in legislation to modernize U.S. infrastructure and the $1.5-2 trillion suddenly pouring into the A.I. construction of data centers.

Corporations are investing as much as possible of their record profits in A.I. that is being touted as the next industrial revolution able to produce more of everything, thus freeing us from the jobs that produce everything.

Fed Governors are already talking about raising interest rates later this year, instead of lowering them to combat the inflation surge. Bond yields have been rising as markets are now expecting higher inflation ahead.

Consumers will be hit the hardest, as surveys now show that just 20 percent can continue to shop as they have been with the rest now living from paycheck-to-paycheck.

This is happening at the same time as retail (CPI) inflation has topped 4 percent, the first time in three years. Its energy index has now risen 23.5 percent in a year, thanks to the Strait of Hormuz closure.

So, 20 percent of consumers can travel, boosting the leisure and hospitality sector, which added 70,000 jobs in May, well above the average monthly gain of 14,000 over the prior 12 months. But food and gas are another matter for the 80 percdent.

Manufacturing payrolls added 7,000 jobs, and construction added 17,000 jobs in May but most of the job growth was in the lower-wage service sector. Employment in local government rose by 55,000, largely reflecting a gain in local government, education (+44,000). Healthcare added 35,000 jobs, in line with the average monthly gain of 38,000 over the prior 12 months.

Former Labor Secretary Robert Reich has predicted what will happen with wealth now concentrated in the hands of so few:

“When so much of our economy is in relatively few hands, we will inevitably get to the point where consumers cannot buy all the goods and services the economy is capable of producing (with A.I.). This puts the entire economy at risk.”

In a sign of the times, sales of existing homes accelerated to their fastest pace of the year in May, led by sales of homes priced at over $1 million, according to research released by the National Association of Realtors. The only categories where home sales declined last month were those homes that are most affordable priced below $250,000.

This second industrial revolution will create fewer high-wage jobs, in other words, because A.I. can already do much of the thinking, problem-solving work as well. Who will take care of the fallout? It will be jobs that improve the human element, particularly in healthcare, which A.I can certainly be helpful in modernizing.

But what about protecting the environment? A.I.’s huge computers use lots of electricity, and water to cool the super computers. But so do ordinary Americans.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

How Do We Repair Our Economy?

Financial FAQs

“The time to repair the roof is when the sun is shining. [State of the Union Address January 11 1962]” President John F Kennedy

 

President Kennedy’s maxim at his 1962 State of the Union address—the almost universal truth that the time to ‘repair’ our economy is when times are good—may seem dated today. At one time it was possible, but not for everyone today.

We have record federal debt fueled by a succession of economic blows—sequential tax cuts that didn’t pay for themselves, recessions, the COVID-19 pandemic, high tariffs, and several wars over the past decades.

And foreign investors are fleeing U.S. government bond markets that literally finance one-quarter of our federal debt because of it, driving up interest rates. Our ballooning federal debt is fast crowding out other government spending; maybe even reducing social security benefits in about 10 years.

Now is the time to repair our economic ‘roof’ while times are good. We have soaring financial markets and 3% annual GDP growth rates that have powered economic growth of late to pay down the soaring federal debt that is already at World War II levels as a percentage of our Gross Domestic Product.

Alas, there is no agreement on how to repair our debt problem. This is while another war is creating a 1970’s-style stagflation that will add $trillions more to the deficit.

International Energy Agency (IEA) officials, such as Fatih Birol, say the current Iran crisis is more severe than the oil shocks of 1973 and 1979, and the 2022 Ukraine-war shock, combined.

And businesses are not hiring new workers because of the economic uncertainty. It is fostering what has been called “The Great Hesitation” by the Wall Street Journal.

The WSJ cited the Baker, Bloom and Davis Economic Policy Uncertainty Index, a widely watched measure of policy-related uncertainty, that has surged to levels “typically seen during situations like the 2008 financial crisis (i.e., Great Recession) and the early months of the Covid-19 pandemic.”

Republicans aren’t showing much concern about the expanded deficit on their watch. Firstly, the highest tariff taxes since 1930 at the onset of the Great Depression has sharply raised every day prices. And the Trump administration’s immigrant shutdown is depriving the U.S. economy of enough new workers to replenish our labor force.

This is in part because Trump and the Republican Party have been unable to rein in the blatant racism of its Christian Nationalists’ policy that has branded almost all immigrant as undesirables. It has brought immigration to a trickle that once averaged one million entrants per year.

Yet immigrants have literally been the life blood of our economy and seed of economic growth. Stanford Business School studies have shown that immigrants represent nearly a quarter of the U.S. workforce in science, technology, engineering, and mathematics and more than a quarter of the nation’s Nobel Prize winners.

President Clinton was able to create actual budget surpluses in his last four years—from 1996-2000—by negotiating with congress to limit government spending on the military as well, until GW Bush busted the federal budget once again with Republican tax cuts while borrowing $trillions more to fight his wars on terror after the 9/11 attack.

How naïve President Kennedy sounds today when he said in 1962, “Members of the Congress, the Constitution makes us not rivals for power but partners for progress. We are all trustees for the American people, custodians of the American heritage.”

We need to repair more than the roof to survive as a democracy. But we must first realize we live under the same roof.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Too Few Jobs!

 

Financial FAQs

“The number of job openings was little changed at 7.1 million in November, the U.S. Bureau of Labor Statistics reported today. Over the month, hires were little changed and total separations were unchanged at 5.1 million each.” BLS.gov

CalculatedRisk

The Labor Department’s JOLTS survey is the first look at job formation before the official December U.S. unemployment report, and it isn’t pretty. The number of job hires equaled the number of ‘separations’, or those leaving the workforce for various reasons—voluntary or involuntary. 

(The blue line is Hires and red bars are Layoffs, Discharges, and other in the Calculate Risk graph. The black line is the total number of Job openings. It has fallen from its high of 12,000,000 job vacancies in 2022 after the COVID-19 pandemic.)

This means existing job positions are being replaced but no additional hires. Companies are holding on to their workforce, in other words, replacing those that are leaving for various reasons, but not expanding their workforce.

Trump’s Labor Department doesn’t tell us why but we can surmise that tariffs are the main culprit, since without the Supreme Court decision, companies don’t know if the existing so-called retaliatory tariffs enacted on April 2 are even legal. Imagine the refunds that the Trump administration has promised to return to importers if SCOTUS rules against him!

The number of hires decreased in state and local government, excluding education (-39,000) and in state and local government education (-31,000). Hires increased in federal government (+11,000), said the Bureau of Labor Statistics.

U.S. manufacturing activity fell to 47.9% in December, the Institute for Supply Management said Monday. This is the lowest reading of the year and the 10th straight month of contraction in the factory sector. Any number below 50% signals contraction.

“Looking at the manufacturing economy, 85 percent of the sector’s gross domestic product (GDP) contracted in December, compared to 58 percent in November, and the percentage of manufacturing GDP in strong contraction (defined as a composite PMI^® of 45 percent or lower) increased to 43 percent, compared to 39 percent in November,” said Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.

ADP, a private payrolls purveyor, has said that just 41,000 jobs were added to payrolls in December. They were mostly in Leisure/hospitality and Education/healthcare, which means the service sector is still limping along.

This is in fact job stagnation, and with the manufacturing sector still in recession and inflation continuing to rise, it’s looking like overall economic stagflation is afoot.

How is a return of stagflation not inevitable with Republicans and Trump continuing to break up the existing world order? He has basically invaded Venezuela and threatened other countries with military intervention, how could it not be otherwise?

Who will want to do business with America at the point of a gun?

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Another Civil War?

 Popular Economics Weekly

“The President of the United States is threatening to go to war with an American city. This is not a joke. This is not normal. Donald Trump isn’t a strongman, he’s a scared man. Illinois won’t be intimidated by a wannabe dictator.” JB Pritzer, Governor of Illinois

 

CBS

Historian Heather Cox Richardson has been documenting the irrational talk of President Trump, who seems to be trying to distract the media from the bad economic news and his involvement in the Epstein files in her quote from Governor Pritzer that she cited above.

“Today the social media account of President Donald J. Trump posted an AI-generated image of Trump as if he were Lieutenant Colonel Bill Kilgore from the 1979 film Apocalypse Now in front of the Chicago skyline with military helicopters and flames and the caption “Chipocalypse Now.” Kilgore loved the war in Vietnam in which he was engaged; his most famous line was “I love the smell of napalm in the morning,” said Professor Richardson

I believe it’s worse than that. He seems to want to foment a civil war by threatening to “invade” Chicago and New York as he invaded Los Angeles, using armed red state National Guard troops. The message is clear. Red southern states are finally able to invade blue northern states, something they couldn’t do in the 1860s civil war!

Can it also be a pretext for stopping the vote in upcoming elections by declaring some form of martial law? The courts have stopped his alien invasion rationale to date for rounding up undocumented immigrants and deporting them without due process.

But economic growth keeps being revised downward. In the Labor Department’s latest revisions, the economy created 911,000 fewer jobs in the last months of the Biden presidency and early stages of the Trump administration, indicating the labor market began to weaken far sooner than previously believed.

The updated employment figures from April 2024 to March 2025 could cause the Federal Reserve to lower short-term interest rates even more in September — and beyond. The latest downward revision is the biggest since at least 2000, reports MarketWatch’s Jeffry Bartash.

As a result, the pace of job creation from May through August slowed to 27,000 a month, one of the worst stretches since 2010 if the pandemic era is excluded.

Trump’s desperate attempt to deflect media attention now that the SCOTUS shadow docket has just allowed him to ignore the Fourth Amendment ban on indiscriminate search and seizure, will give Democrats plenty of political ammunition for the upcoming elections. The Supreme Court decision means ICE can stop any Hispanic looking, or Spanish speaking, person who must prove to their satisfaction that they are a US citizen or here legally.

It is an incredible overstretching of authority. And the immigration roundup in general will harm legal immigrants and minorities as well. Will Americans vote for a political party that blatantly breaks the Fourth Amendment, other than the hard line MAGA base that believes anything Trump says?

It is why Trump wants to rename the Defense Department as the Department of War, and Defense Secretary Pete Hegseth is now talking and acting like a White Supremacist to rally Trump’s base.

I believe that Trump will touch a nerve that he hadn’t counted on, Americans’ love of freedom. Trump preaches the opposite, the right to imprison many Americans on almost any pretext.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

More Signs of Slow Growth

 Financial FAQs

“The manufacturing economy continues to struggle,” Susan Spence of ISM said. “It will continue to struggle” due to all the trade uncertainty.

“The administration’s tariffs alone have created supply chain disruptions rivaling that of Covid-19,” an executive at an electronics company told ISM.

FREDmanufacturingemployment

The only number in the Institute of Supply Management’s (ISM) manufacturing survey that rose were prices due to a shortage of commodities—i.e., supply. Every other component of the supply managers’ survey was contracting—such as new orders, production, and employment.

Manufacturing employment had been declining since 1980; from 19,000,000 jobs to 12,765,000 jobs in April per the FRED graph out of a total 159 million jobs.

It’s the first sector of the U.S. economy that is showing stagflation—prices are up while production is stagnating. Hence the above remarks from supply managers and Susan Spence, Chair of the ISM Survey.

The services index of the Institute for Supply Management also contracted for the first time in a year. It fell to 49.9% in May from 51.6% in April, the ISM said Wednesday. Any number below 50% signals contraction.

Economic activity in the services sector contracted in May, the first time since June 2024, say the nation's purchasing and supply executives in the latest Services ISM^® Report On Business^®. The Services PMI^® indicated slight contraction at 49.9 percent, below the 50-percent breakeven point for only the fourth time in 60 months since recovery from the coronavirus pandemic-induced recession began in June 2020.

The Labor Department’s JOLTS report shows that the service sector is still adding jobs. Job openings rose in April for white-collar, retail, healthcare, and entertainment and recreation roles. But job listings fell at hotels and restaurants, whose business has been hurt by a decline in tourism. Some foreign visitors have put off trips to the U.S. because of the trade wars and other White House policies.

Another disheartening jobs report came out today. ADP, a private payroll processor, reported that privately run businesses created just 37,000 new jobs in May — the smallest increase in more than two years — as the most damaging global trade wars since the Great Depression spurred many firms to put a pause on hiring.

The real problem is that employers won’t begin to hire again until the trade wars are resolved, and President Trump says he isn’t letting up on the tariff wars because it will create more manufacturing jobs. But that will take years, and automation has replaced most of the manufacturing jobs (which no longer pay as well) before we see any signs of a manufacturing resurgence.

Economists such as Paul Krugman, who won a Nobel Prize for his pioneering research in foreign trade, remarking on the sudden 50 percent increase in steel tariffs, believes the damage  to the U.S. Economy from such draconian tariff rates (i.e., import taxes) is already done.

So steel tariffs don’t make any policy sense. But then neither does anything else in Trump’s trade war — and the nonsensical nature of the whole enterprise is why I don’t think he’ll find an off-ramp. After all, it’s obvious that the increased steel tariff wasn’t a considered policy, it was a temper tantrum after the Court of International Trade ruled against his other tariffs.

Is the contraction of both the service and manufacturing sectors the first sign that the U.S. economy is already in recession? This Friday’s ‘official’ U.S. Labor Department unemployment report will tell us more.

Harlan Green © 2025

Follow Harlan on Twitter: https://twitter.com/HarlanGreen

Do Job Cuts = Recession?

 Popular Economics Weekly

“I don’t see any kind of well-thought-out, comprehensive strategy coming out of the White House,” said Bernard Baumohl, chief global economist at the Economic Outlook Group, a nonpartisan forecasting firm.

What is the White House strategy? Is it based on the campaign promises to bring down inflation on “Day 1”, eliminate waste and fraud, and cut regulations that impede new investments, such as in AI?

The White House to date is attempting to explain why it hasn’t developed a strategy. Treasury Secretary Scott Bessent opined that,

“The market and the economy have just become hooked, and we’ve become addicted to this government spending, and there’s going to be a detox period. There’s going to be a detox,” Bessent, a former hedge-fund manager, said during a CNBC interview.

This description of a “detox” period is alarming, because the term has nothing to do with an economic plan, or anything else, but in fact means the Trump administration is hinting that a recession may be required to wean US off what they deem as too many government services that benefit ordinary Americans rather than the Oligarchs that have jumped onto the Trump/Musk bandwagon.

The wet dream of Republicans and conservatives has historically been to downsize government to little more than military defense. That’s why Trump has targeted USAID and the Department of Education, as well as cuts to social security, Medicare, and Medicaid.

Douglas Holtz-Eakin, a former (Republican) director of the Congressional Budget Office, said it was a fine sentiment for a Treasury secretary to want to reduce government spending but noted that there was no GOP plan in sight to accomplish this goal in any sustainable way, according to MarketWatch.

FREDfederalspending%GDP

Part of the problem in downsizing government is that it’s extremely difficult to bring federal government spending below 20 percent of Gross Domestic Product as portrayed in the above FRED historical graph dating from 2010. Spending surged above that level only twice to aid recoveries from the Great Recession and COVID pandemic.

Part of that surge was the Biden administration’s new, New Deal legislation that has already brought 700,000 manufacturing jobs home in the CHIPS, Infrastructure and Inflation Reduction Acts.

These were public/private investments that resulted in the US having the fastest economic recovery from COVID-19 in the developed world.

Trumps says he also wants to bring manufacturing jobs home with the trade tariffs. But his single-minded emphasis on tariffs against friend or foe without negotiating up front will increase inflation, largely because it will be reciprocated, launching a trade war.

And rather than eliminating waste and fraud, the DOGE firings are downsizing or eliminating departments and agencies that make it work—such as the FAA, Energy Department, VA and even social security—which will do exactly the opposite—make us less safe.

“It all seems to be very capricious,” continued Baumohl, “and I think this has been of great concern, not just to U.S. and foreign investors, but certainly to consumers, and we’ve seen that in the abrupt decline in confidence, which is now showing up in in their spending patterns. Once consumers start to cut back, there is nothing that the government can do to make sure that the economy keeps out of recession, because we’re talking about 70% of all economic activity.”

Will such a strategy, or lack of it, work? American consumers are already starting to give the final word. The University of Michigan’s consumer sentiment survey showed consumers becoming even more pessimistic about their future.

“Consumer sentiment slid another 11% this month, with declines seen consistently across all groups by age, education, income, wealth, political affiliations, and geographic regions. Sentiment has now fallen for three consecutive months and is currently down 22% from December 2024.” said Survey Director Joanne Hsu.

It looks like the Trump/Musk administration doesn’t want Americans to know what they are really up to, and it is leading to the wholesale destruction of the U.S. economy.

It will take more than picketing Tesla factories and dealerships for Americans to prevent what is sure to become a recession from happening.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Bidenomics Works--Part II

 Financial FAQs

A large fraction of voters do suffer from economic illiteracy. Indeed, it is fair to say that an ample majority do not understand the basics of how markets work. They are especially confused about labor and international markets. Voters also have severe misconceptions about how government spends their tax dollars, and are extraordinarily pessimistic about long-run economic conditions.” Professor Bryan Caplan of George Mason University, citing a recent Washington Post/ Henry J. Kaiser Family Foundation/ Harvard University Survey Project.

CalculatedRisk

“Job openings in the U.S. rose to a six-month high of 8.1 million in November from 7.8 million in the prior month, helped in part by a rebound in employment after two major hurricanes and the start of the holiday shopping season,” Jeffry Bartash, MarketWatch

Surveys such as the US Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) report as portrayed in the above graph are saying that consumers’ jobs are still safe. Then why so much angst that things might get worse? Polls seem to be buffeted by the latest political winds, especially with Trump’s repeated assertions that our economy is in terrible shape.

“Our Country is a disaster, a laughing stock all over the World!” he declared on social media last week, per NYTimes Peter Baker.

Yet we know that President Biden’s Bidenomics legislation has made us the fastest growing developed country in the world after the COVID-19 pandemic. We have been fully employed for more than two years, and inflation is back down to the 2 percent range.

Peter Baker added, “New data reported in the past few days indicate that murders are way down, illegal immigration at the southern border has fallen even below where it was when Mr. Trump left office and roaring stock markets finished their best two years in a quarter-century.

Polls have shown that this is because it’s easier to blame than understand what is happening to ordinary people’s financial circumstances. PEW Research has shown that although voters like their own situation, many believe the overall US economy is in the dumps; some even believing we are in a recession.

There are plenty of horror stories to encourage such a view, such as our national debt has ballooned to 121 percent of GDP, and we may soon lose our last Aaa bond rating.

But the latest economic facts are that both the service sector and manufacturing sectors of our economy are doing very well. Consumers are still powering travel, leisure activities, healthcare, and construction industries per the most recent Institute for Supply Management Service Sector survey. It’s headlines touted:

• Sharpest growth of output and new orders since March 2022
• Employment increases for first time in five months
• Business confidence at 18-month high

The ISM manufacturing survey showed similar but slower growth. “The overall economy continued in expansion for the 56th month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy.)

Because Americans get most of their news from public media that doesn’t make much of an effort to differentiate facts from fiction, truth from lies, it requires an effort to ferret out the difference. Propagandists know this as well, hence their nonstop efforts to repeat the fictions.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Economic Growth To Resume

 Popular Economics Weekly

BEA.gov

It looks like the slowdown in US economic growth may end as quickly as it began. Second quarter economic growth was less negative in the BEA’s second estimate of GDP growth, because key drivers of growth have been increasing in the latest months.

The Bureau of Economic Analysis press release said, “Real GDP decreased less in the second quarter than in the first quarter, decreasing 0.6 percent after decreasing 1.6 percent. The smaller decrease reflected an upturn in exports and a smaller decrease in federal government spending that were partly offset by a larger decline in private inventory investment, a slowdown in consumer spending, and downturns in nonresidential fixed investment and residential fixed investment. Imports decelerated.”

What this means is that the red-hot job market (528,000 new nonfarm payroll jobs in July), and 1.5 percent increase in consumer spending in Q2 (that makes up some 70 percent of economic activity) have kept our economy from falling into a deeper slowdown, or recession—whatever economists want to call it.

The point is the ‘slowdown’ was so mild and corporate profits high enough that corporations continued to hire rather than fire, and consumers chose to spend rather save during the inflationary surge.

“The number of people who applied for unemployment benefits last week fell to a one-month low of 243,000, indicating layoffs remain near record lows and that a tight labor market is keeping the U.S. economy moving forward,” said MarketWatch’s Jeffrey Bartash.

The Atlanta Federal Reserve’s third quarter estimate, GDP Now estimate ranges from 1.3 to 2.5 percent growth. I will take either of those numbers, as it signals good months of growth ahead, no matter what the Fed Governors do to bring down inflation.

Continued growth depends in part on how consumers flush with savings continue to react to inflation. Most surveys of their expectations say that they don’t see a prolonged inflation, in part because it’s easy to see that the Ukraine war will eventually end that is pushing up food and energy prices, and supply-chain constrictions will ease as other countries recover from the COVID pandemic.

UnivMichigan

China is having especial difficulties in recovering from the pandemic, in part because it is run by an extremely dictatorial communist party that believes it can only hold onto power by suppressing any signs of COVID symptoms with draconian lockdowns, just as it suppresses its populace in other ways to prevent it from looking weak in the public eye.

In fact, inflation is already declining, mainly because world oil prices have plunged, and food prices may also soften with the good news that grain shipments from the Ukraine have finally begun.

That’s in part because U.S. consumers' expectations for where inflation will be in a year and three years dropped sharply in July, a New York Federal Reserve survey showed on Monday, as reported by Reuters, indicating U.S. central bankers might be winning the fight to keep the outlook for price growth as they battle to tame high inflation

So, the latest data seem to show economic growth will finally have a tailwind to propel it, rather than the headwind it’s been experiencing since January.

Harlan Green © 2022

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

A Better Use of Economic Growth

 Popular Economics Weekly

AtlantaFed

The Atlanta Federal Reserve Bank puts out a GDP now forecast of upcoming monthly GDP growth, and its latest estimate puts growth at the highest level since the 1980s, as we recover from the COVID-19 pandemic.

“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2021 is 8.3 percent on April 16, unchanged from April 15 after rounding,” said the Atlanta Fed. “After this morning's housing starts report (last week) from the U.S. Census Bureau, the nowcast of first-quarter real residential investment growth decreased from 10.6 percent to 10.2 percent."

However, new-home sales’ figures Friday showed even faster residential investment growth ahead, reports the US Census Bureau. 

Sales of new single-family houses in March 2021 were at a seasonally adjusted annual rate of 1,021,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 20.7 percent (±23.7 percent) above the revised February rate of 846,000 and is 66.8 percent (±36.7 percent) above the March 2020 estimate of 612,000.

The problem is not finding more ways to boost GDP growth, per se, but how it will be utilized. Since the 1980s, a growing percentage of the Gross National Income derived from GDP growth has gone to ‘rentiers’, i.e., people that receive  income from their assets rather than wages.

That is in part due to the huge decline in personal and corporate taxation of said wealth that has allowed rentiers to accumulate more private wealth, rather than investing in productive enterprises.

What creates GDP? The aggregate, or effective demand of all goods and services produced domestically. Economists have broken it into four components, of which consumer spending is the largest portion. The rest is made up of net exports, government expenditures, and investments.

Consumers spend on private consumer goods, so it is up to investment and government spending to build for future growth. That has not happened because corporations haven’t been maintaining a decent level of capital expenditures and government investments in infrastructure, education, R&D, and our social safety net that would keep workers healthy enough to be more productive has been cut sharply since the 1970s.

GDP growth has been paying too little for future generations since then, in other words, so taxing some of the wealth accumulated since 1980 is needed to pay it forward.

President Biden’s $2.3 trillion American Jobs Plan is meant to correct the underinvestment in the public good. He is calling for more than $1 trillion to be invested just in the various components of infrastructure, including better roads, bridges, public transportation, expanding broadband and electric grids, as well as electric vehicle use.

He is also calling for more spending on health care and the national housing shortage—some $213 billion to “build, preserve and retrofit more than 2 million homes and commercial buildings to address the affordable housing crisis,” $100 billion to modernize public schools and early learning facilities, and $180 billion in research and development of future technologies, and more.

This supports much more than infrastructure, as it fulfills every person’s basic need of food, shelter, and security.

The initial first quarter GDP estimate comes out Thursday, and consensus predictions are for 7 percent growth. Whatever it will be, it is important that it be used in productive ways, and the just-passed American Recovery Act and upcoming American Jobs Plan begin that process of utilizing America’s economic growth to support a better future for all Americans.

Harlan Green © 2021

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

We Need New Jobs Deal

Calculated Risk

The best picture we have of current and future job trends is the Labor Department’s JOLTS report (i.e., Job Openings and Labor Turnover Survey). Calculated Risk’s colorful graph shows Job Openings (yellow line) hasn’t yet dropped below 7 million openings in August, though it is falling.

This is a given while there were 5.8 million Hires (dark blue line), so there are still 1.2 million job vacancies searching for employees.  It gives a good picture of the huge labor turnover rate in the $20 trillion U.S. economy.

It is also why it is so difficult to predict the next recession, or depression. I maintain we need another New Deal that boosts public spending on health care, education, infrastructure, R&D, and the environment, if we want to continue the longest economic recovery ever.

How low must the number of Job Openings fall—maybe 1-2 million?—for anyone to begin to worry that a lack of available jobs that promotes real productivity might begin to hurt growth?  The yellow line of the Job Openings tally dipped to some 2.4 million op enings in 2009 at the bottom of the Great Recession.

 The red and blue columns show Layoff, Discharges and other, and Quits (light blue column), which are basically flat, which means we are at the top of this business cycle.  The only hint of a downward trend in job formation is the downward curve in the number of Job Openings (yellow line).

We really must look for any downward trend in retail sales, and consumer spending to tell us the direction of economic growth.  Retail sales dropped 0.3 percent last month as households slashed spending on building materials, online purchases and especially automobiles, the first spending decline since February.

What else should we look for?  Nobel prize-winning behavioral economist Robert Shiller believes consumer spending is holding up this longest economic upturn since WWII because of the Trump presidency.  The fact that he touts himself as a successful businessman creates a general sense of optimism about jobs and the economy.

“Trump has for decades touted a glamorous narrative of his life by “surrounding himself with apparently adoring beautiful women, and maintaining the appearance of vast influence,” Shiller said in a recent op-ed in Britain’s the Guardian newspaper. “The end of confidence in Trump’s narrative is likely to be associated with a recession,” Shiller warned.

So such optimism can be a two-edged sword.  While Trump’s affluent lifestyle has been “a resounding inspiration to many consumers and investors … a severe recession may be his undoing,” Shiller warned.

What else could cause such an outcome?  The Great Recession that ended in June 2009 could have been a second Great Depression; but for the Obama administration’s passage of the $850 billion American Reinvestment and Recovery Act emergency aid package that gave states as well as Washington enough dollars to stop the losses.

But, alas, the religiously right wing Tea Party that resisted almost all public spending took over the house in 2010, sharply cutting back further government programs. The focus turned to austerity measures that hurt the Midwest and southern states depending on government largesse to support them, after the loss of all those manufacturing jobs.

The result is the discontent we see today.  We need another New Deal that will invest in our future generations--those roads, bridges, schools; need we say more?--rather than a “glamorous lifestyle”, to sustain this recovery.

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

The Rebuilding of Local Communities!

ANSWERING the KENNEDYS CALL

Where does the rebuilding of local communities that creates a sense of healthy community itself really happen? At the local level, whether it be in neighborhoods, towns, or cities. It is everywhere residents find a reason to band together.

And it is an answer to the fragmentation of local communities caused by the loss of so many blue collar jobs due to the Digital Revolution and Globalization of the workforce that has internationalized commerce so that corporations ignore national borders in their search for cheaper labor and new markets.

This has meant that towns, cities and states have had to look inward to heal their broken communities in order to provide citizens with the necessary means to grow and prosper. National Night Out is one such community-building effort that has become a nation-wide movement.

It is an annual community-building campaign that promotes public safety-community partnerships and neighborhood camaraderie. National Night Out enhances the relationship between neighbors and public safety and fosters that sense of community.

It is“… a chance to bring neighborhoods together with the men and women who protect them. The safety of our communities depends on both law enforcement and the neighbors they serve. National Night Out enhances that cooperation,” says Vice President Joe Biden.

Millions of neighbors take part in National Night Out across thousands of communities for one night each year.

What is its history? National Night Out has been celebrated since 1984 and is sponsored by the National Association of Town Watch in the United States and Canada. NATW introduced National Night Out in August of 1984 through an already established network of law enforcement agencies, neighborhood watch groups, civic groups, state and regional crime prevention associations and volunteers across the nation. The first annual National Night Out involved 2.5 million neighbors across 400 communities in 23 states. However, the event soon grew to a celebration beyond just front porch vigils.

Neighborhoods across the nation began to host block parties, festivals, parades, cookouts and various other community events with safety demonstrations, seminars, youth events, visits from emergency personnel, exhibits and much, much more. Today, 38 million neighbors in 16 thousand communities across the nation take part in National Night Out.

My home town of Redwood City, California is one such city participating in National Night Out. Here are some of the programs designed to foster a sense of belonging to a viable community and city:

“National Night Out is an annual community-building campaign that promotes public safety-community partnerships and neighborhood camaraderie. National Night Out enhances the relationship between neighbors and public safety and fosters Redwood City's sense of community."

Join your Redwood City neighborhood this year on August 7 to celebrate National Night Out!
Centennial - Mezes Park, 6-8 p.m.
Eagle Hill - Block Party at Quartz and St. Francis St., 5-8 p.m.
Friendly Acres - Barbeque at Andrew Spinas Park, 6-8 p.m. Fun and games for children and families.
Redwood Shores/Sandpiper Lagoon HOA - Block Party at Avocet Dr. and Waterside Circle from 5:30 - 7:30 p.m. Redwood City Police and Fire departments will attend. Light food and drinks will be provided. Please park in guest parking only or walk to the area.
Redwood Village - Join your neighbors for food, ice cream, classic cars, and a jumper on Flynn St. (off Greenwood), from 6-8 p.m.
Roosevelt - Gather at the Sheltered BBQ Area at Red Morton Park (by the Bocce Ball Court, behind the Community Activities Building) from 6 - 8 p.m. Come tie-dye t-shirts and participate in a dessert contest. 
Woodside Plaza - Gather at Maddux Park from 5 - 8 p.m. for corn hole, ladder golf, and a bake-off competition. Redwood City Police and Fire departments will attend with cars and trucks. RCPD will provide fingerprinting kits. Kona Hawaiian Ice Truck will stop by from 6 - 7 p.m. At 8 p.m. Maddux movie night will follow with a showing of The Princess Bride.
Go here to learn more.

What could be more enjoyable on a summer evening that coming together with others to celebrate your own community’s well-being.

Harlan Green © 2018

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen