The United States is undergoing a profound economic restructuring, due to pressures of globalization and the rising knowledge economy. America’s Great Lakes region, once the core of the nation’s industrial production and wealth creation, is losing ground rapidly. At this critical moment, federal investment in U.S. competitiveness lacks a regional focus. Federal policy fails to recognize that national growth is driven by integrated regional economies with the strong underlying assets necessary for talent creation and innovation.
Source: The Brookings Institution
Recent economic data provide the clearest signs that the problems in the housing and financial markets are affecting the economy as a whole. In December 2007 payroll employment growth fell nearly to zero and the unemployment rate rose 0.3 percentage points to 5.0 percent. The last time the unemployment rate climbed this much in one month was in the 2001 recession. Delinquency and foreclosure rates are rising and risk spreads in financial markets remain much wider than last summer. On the other hand, there are some reassuring indicators: net exports have been trending up, and consumer spending rose at a brisk pace in October and November. However, most forecasters are predicting a marked slowdown in economic growth for several quarters, and many put the odds of recession in the neighborhood of 50 percent.
Full Document (PDF; 913 KB)
Source: Joint Economic Committee
U.S. Senator Charles E. Schumer, Chairman of the Joint Economic Committee (JEC) and Congresswoman Carolyn B. Maloney, Vice Chair of the JEC, today released the Committee’s annual report. The President says his policies are working to make the economy strong and that all Americans are benefiting, but the facts show an economic record that has left the vast majority of American families behind. The JEC report concludes that the country needs a change in direction to get our economy back on the right track and to ensure that all American families share in our nation’s growing prosperity.
Highlights: The main indicator of the overall health of the U.S. economy, GDP growth, has been anemic during this economic recovery. Since the last economic peak in the first quarter of 2001, the economy has expanded at an annual rate of only 2.6 percent, about a third less than the 3.7 percent average growth rate of the three prior economic cycles of similar length.
The 2007 Joint Economic Report – Report of the Joint Economic Committee of the United States on the 2007 Economic Report of the President Together with Minority Views. Report 110-251, December 2007 (234 pages, PDF)
Source: Securities Industry and Financial Markets Association’s Economic Advisory Roundtable
The Securities Industry and Financial Markets Association’s (SIFMA) Economic Advisory Roundtable today unveiled its predictions for 2008, forecasting that the pace of U.S. economic growth would slow in the first half of the year, but accelerate in the second half. In the year-end survey, the median forecast anticipates GDP to grow but at a below-trend pace of 2.1 percent in 2008 as the economy works through the housing sector contraction and the effect of credit market turbulence.
The Roundtable also expects the Federal Open Market Committee to reduce the target Fed funds rate by 25 basis points to 4.25 percent at the upcoming December 11 meeting. The consensus view among the Roundtable members was that the accompanying FOMC statement will emphasize risks to economic growth.
Full report (PDF; 98 KB)
Source: The Brookings Institution
The dream that one can rise up from humble beginnings and achieve a comfortable middle-class living, if not attain great wealth, transcends racial lines. But is this a reality for black and white families alike?
This report, by Julia Isaacs of The Brookings Institution, reviews overall income trends based on Census Bureau data and provides an intergenerational analysis based on a longitudinal data set that allows a direct match of the family income of parents in the late 1960s to their children’s family income in the late 1990s to early 2000s.
In brief, trends show that median family incomes have risen for both black and white families, but less so for black families. Moreover, the intergenerational analysis reveals a significant difference in the extent to which parents are able to pass their economic advantages onto their children. Whereas children of white middle-income parents tend to exceed their parents in income, a majority of black children of middle-income parents fall below their parents in income and economic status. These findings are provided in more detail below.
Full Report (PDF; 264 KB)
From the summary:
Despite facing new and unprecedented challenges–economic, environmental, and demographic–America stands in a position of great strength. To achieve economic prosperity that is broadly shared and environmentally sustainable, our nation must leverage the key assets–innovation, human capital, infrastructure, and quality places–that principally concentrate in our major metropolitan areas.
The number of good jobs -jobs that pay at least $17 an hour, and provide health insurance and a pension — declined by 3.5 million between 2000 and 2006, according to a new report by the Washington, DC-based Center for Economic and Policy Research.
The report, “The Good, The Bad, and the Ugly: Job Quality in the United States over the Three Most Recent Business Cycles,” (PDF; 274 KB) found that the economy has created fewer good jobs in the 2000s than was the case over comparable periods in the 1980s and 1990s.
The research defined a good job as one that pays $17 an hour, or $34,000 annually, has employer-provided health care and offers a pension. The $17 per hour figure is equal to the inflation-adjusted earnings of the typical male worker in 1979, the first year of data analyzed in the report.
Using this definition, the share of good jobs fell 2.6 percentage points, or about 3.5 million jobs, between 2000 and 2006. This decline was much sharper than what the economy experienced over comparable periods in the two preceding business cycles. Between 1979 and 1985, for example, the share of good jobs fell 0.5 percentage points. Between 1989 and 1995, the drop was just 0.l percentage points.
From the summary:
The 2007-2008 Assets and Opportunity Scorecard contains evidence that even profound and enduring ownership patterns can change and change fast. In the two years since the release of the 2005 Scorecard, median net worth jumped 20% nationwide, while it jumped 68% for women and more than doubled for minorities. Most of these gains have come as a result of increasing homeownership and home values, and are therefore at risk that as interest rates rise and grace periods end, foreclosure rates will also rise. The results underscore the efficacy of housing finance and credit innovation and the need for policing and reigning-in predatory lending.
Yet, the most important message of the 2007-2008 Scorecard, like its two predecessors, is the disparity in asset ownership – and, consequently, economic opportunity–among states, and by race, gender and income.
From the summary:
Public assessments of the nation’s economy have fallen to a two-year low, and the nation’s economic outlook remains relatively gloomy. In particular, faced with a steady stream of negative news about the U.S. housing market, Americans are substantially less inclined than they were even a few months ago to say they expect home prices to increase over the next few years. People living in areas with the most expensive homes and middle-income Americans are particularly likely to say that future home prices will decline.