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Recession lingers in America
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Paul Sancya/The Associated Press
Job seekers wait at a job fair in Southfield, Mich., on June 15. Two years after economists declared an end to the recession, the rebound is the weakest since the 1930s .
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THE ASSOCIATED PRESS
WASHINGTON -- This is one anniversary few feel like celebrating.
Two years after economists say the Great Recession ended, the recovery has been the weakest and most lopsided of any since the 1930s.
After previous recessions, people in all income groups tended to benefit. This time, ordinary Americans are struggling with job insecurity, too much debt and pay raises that haven't kept up with prices at the grocery store and gas station. The economy's meager gains are going mostly to the wealthiest.
Workers' wages and benefits make up 57.5 percent of the economy, an all-time low. Until the mid-2000s, that figure had been remarkably stable -- about 64 percent through boom and bust alike.
Executive pay is included in this figure, but rank-and-file workers are far more dependent on regular wages and benefits. A big chunk of the economy's gains has gone to investors in the form of higher corporate profits.
"The spoils have really gone to capital, to the shareholders," says David Rosenberg, chief economist at Gluskin Sheff + Associates in Toronto.
Corporate profits are up by almost half since the recession ended in June 2009. In the first two years after the recessions of 1991 and 2001, profits rose 11 percent and 28 percent, respectively.
And an Associated Press analysis found that the typical CEO of a major company earned $9 million last year, up a fourth from 2009.
But if the recession is long gone from Wall Street and corporate boardrooms, it lingers on Main Street:
■ Unemployment has never been so high -- 9.1 percent -- this long after any recession since World War II. At the same point after the previous three recessions, unemployment averaged 6.8 percent.
■ The average worker's hourly wages, after accounting for inflation, were 1.6 percent lower in May than a year earlier. Rising gasoline and food prices have devoured any pay raises for most Americans.
■ The jobs that are being created pay less than the ones that vanished in the recession. Higher-paying jobs in the private sector, the ones that pay roughly $19 to $31 an hour, made up 40 percent of the jobs lost from January 2008 to February 2010 but only 27 percent of the jobs created since then.
Kathleen Terry is one of those who had to settle for less. Before the recession, she spent 16 years working as a mortgage processor in Southern California, earning as much as $6,500 in a good month, a pace of about $78,000 a year.
But her employer was buried in the housing crash. She found herself out of work for 2½ years. As her savings dwindled, the single mother had to move into a motel with her three daughters.
They got by on welfare and help from their church and friends. Terry started taking a 90-minute bus ride to job training courses. Eventually, she found work as a secretary in the Riverside County, Calif., employment office. She likes the job but earns just $27,000 a year. "It's a humbling experience," she says.
Hard times have made Americans more dependent than ever on social programs, which accounted for a record 18 percent of personal income in the past three months of 2010 before coming down a bit this year. Almost 45 million Americans are on food stamps, another record.
Ordinary Americans are suffering because of the way the economy ran into trouble and how companies responded when the recession hit.
Soaring housing prices in the mid-2000s made millions of Americans feel wealthier than they were. They borrowed against inflated home equity or traded up to more expensive houses.
Many Americans also took advantage of exotic mortages offered by financial companies, which were later bundled as investments that turned out to be risky.
Americans' debts as a percentage of their annual after-tax income rose to a record 135 percent in 2007.
Then, housing values and prices started tumbling, which caused a financial crisis in the fall of 2008. A recession that had begun in December 2007 turned into the deepest downturn since the Depression.
Economists Kenneth Rogoff of Harvard University and Carmen Reinhart of the Peterson Institute for International Economics analyzed eight centuries of financial disasters around the world for their 2009 book "This Time Is Different." They found that severe financial crises create deep recessions and stunt the recoveries that follow.
This recovery "is absolutely following the script," Rogoff says.
Federal Reserve numbers crunched by Haver Analytics suggest that Americans have a long way to go before their finances will be strong enough to support robust spending: Despite cutting what they owe the past three years, the average household's debts equal 119 percent of annual after-tax income. At the same point after the 1981-82 recession, debts were at 66 percent; after the 1990-91 recession, 85 percent; and after the 2001 recession, 114 percent.
Because the labor market remains so weak, most workers can't demand bigger raises or look for better jobs.
"In an economic cycle that is turning up, a labor market that is healthy and vibrant, you'd see a large number of people quitting their jobs," Gluskin Sheff economist Rosenberg says.
Instead, workers are toughing it out, thankful they have jobs at all. Just 1.7 million workers have quit their job each month this year, down from 2.8 million a month in 2007.
The toll of all this shows in consumer confidence, a measure of how good people feel about the economy. According to the Conference Board's index, it's at 58.5. Healthy is more like 90. By this point after the past three recessions, it was an average of 87.
How gloomy are Americans? A USA Today/Gallup poll eight weeks ago found that 55 percent think the recession continues, even if the experts say it has been over for two years. That includes the 29 percent who go even further: They say it feels more like a depression.
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But, I thought Obama had declared that the recession was over just 5 months into his Presidency! Obama is truly a genius in all things! ... ... ... Of course, Obama can't seem to actually call it for what it is: a DEPRESSION. .. .. They aren't allowed to use the n word, and now, they aren't allowed to use the d word. .. ..
There are too many people that would love to be making "only" $27,000 a year.
"Contrary to what those in power would like you to believe -- so that you'll
give up your pension, cut your wages, and settle for the life your
great-grandparents had -- America is not broke. Not by a long shot. The country
is awash in wealth and cash. It's just that it's not in your hands. It has been
transferred, in the greatest heist in history, from the workers and consumers
to the banks and the portfolios of the uber-rich. Today just 400 Americans have
more wealth than half of all Americans combined. Let me say that again. 400
obscenely rich people, most of whom benefited in some way from the
multi-trillion dollar taxpayer "bailout" of 2008, now have more loot, stock and
property than the assets of 155 million Americans combined."
--Michael Moore,
speaking in Wisconsin, 5 March 2011
"Corporate profits are up by almost half since the recession ended in June 2009." Do you really need to read any more? There never was a recession for those people or the super-rich, but ours is never going to end. Only a fool would blame either party; they have been in lockstep the past 30 years to get to this point. Very rich people we don't get to vote for, now write the laws and think they own the world. Mission accomplished! We, the real people, are screwed until we do something meaningful about it. And by meaningful, I don't mean continuing the phony exercise of voting for one of two parties, neither of which could care any less about you and me.
That's what you get when voting for the food stamp dem party.
There seems to be something missing in this report, according to the Pew Hispanic Center since the supposed end of the recession in July of 2009, native born workers have lost 1.2 million jobs and foreign born workers have actually gained 656,000 jobs. Funny how they deliberately leave just a few little bits of job info out for PC sake. The job recovery is a little more brighter for some than others, how's that feel. - http://pewhispanic.org/reports/report.php?ReportID=129