Posts Tagged ‘Gary Locke’

Economy Reaches Stall Speed

Tuesday, August 23rd, 2011

The American economy expanded at a snail’s pace of just 1.3 percent in the 2nd quarter, according to a report from the Department of Commerce. Growth in the first three months of 2011 was reduced to 0.4 percent from an earlier reading of 1.9 percent.

“Today’s first look at GDP in the 2nd quarter confirms what we already knew:  The economy isn’t growing as fast as it needs to,” said Commerce Secretary Gary Locke.  “Experts have repeatedly warned that if this uncertainty continues, our economy will pay the price.  We can’t afford to return to the same failed policies that brought us here.  We must build on the progress we’ve made over the last two years and reach a balanced compromise that will reduce our debt and at the same time strengthen our job-creating ability and global competitiveness for the future.”

Soaring gas prices and meager income gains caused consumers to limit their spending in the spring.  The abrupt slowdown means the economy in 2011 will likely grow at a slower pace than in 2010.  Additionally, economists don’t expect growth to pick up enough in the 2nd half to cut the unemployment rate, which rose to 9.2 percent In June.  Economists originally thought that a Social Security payroll tax cut would spur adequate growth to reduce the unemployment rate.  Unfortunately, the lion’s share of that money was spent filling up gas tanks as gas prices soared.  In an unfortunate twist, employers pulled back on hiring because Americans spent less.  Thanks in part to high gas prices, consumer spending was virtually flat throughout the spring.  It grew a mere 0.1 percent, after experiencing 2.1 percent growth in the winter.  Spending on long-lasting manufactured goods — primarily autos and appliances — declined 4.4 percent.

Usually reliable government spending fell for the 3rd consecutive quarter.  State and local governments also slashed spending, the seventh time in eight quarters since the recession officially came to an end.  Corporate spending on equipment and software grew 5.7 percent in the 2nd quarter, down from the 1st quarter’s impressive 8.7 percent pace and below 2010’s double-digit gains.  Additionally, American incomes are not growing.  After-tax incomes, adjusted for inflation, rose just 0.7 percent, similar to the 1st quarter and the weakest numbers since the recession ended.

Kathy Bostjancic, director for macroeconomic analysis at the Conference Board, said the poor new data could push the American economy back into recession.  Although she said that the chances of that are still low. “Anemic consumption, still declining state and local government spending, tepid business investment, and soft housing activity all combined to offset some strength in exports,” she said.  “Concerns about the weak labor market and rising food and energy prices continue to weigh on consumer confidence.”  In June, the Federal Reserve cut its estimate of economic growth for the year.  The Fed now thinks that the economy will grow between 2.7 percent and 2.9 percent, down from an April estimate of 3.1 percent to 3.3 percent.

The economy is struggling to recover from the recession that lasted from 2007 to 2009, a time when the GDP contracted.  According to a government report, the recession was even worse than originally estimated.  Between the last few months of 2007 and the middle of 2009, the economy declined by 5.1 percent.  That is one percentage point more than previous estimates.

Writing in the Washington Post’s “Political Economy” column, Neil Irwin says that “But even if the number comes in somewhat higher than economists are expecting, it will be no cause for celebration.  The U.S. economy is capable of growing at about 2.5 percent a year over the longer term, as the population increases and workers become more productive.  But when the economy grows at that rate, the labor market can only tread water — accommodating the rise in the labor force, but unable to put the millions of Americans still unemployed back to work.  So, what happens to employment when the nation’s economic growth stays below that 2.5 percent rate, as it has in the 1st half of this year?  The U.S. jobless rate has risen for three months straight.  Among the major culprits in keeping job seekers out of work are the financial struggles faced by state and local governments that are cutting tens of thousands of jobs and billions of dollars in spending each month to balance their budgets.  State and local government cutbacks subtracted 1.2 percentage points from 1st quarter GDP, the Commerce Department has estimated.  Friday’s GDP release shows the amount of drag in the 2nd quarter.  States were able to delay those cutbacks when they received hundreds of billions of dollars from the federal government in 2009 to ride out the recession.  That money has all been spent, and now states are being forced to slash spending and raise taxes to comply with balanced-budget requirements.  Congress has given little serious consideration to reviving the stimulus program.”

Some economists see the light at the end of the tunnel.  “The pace of fiscal retrenchment is likely to pick up in coming years,” said Jan Hatzius, Goldman Sachs’ chief economist, “and this year’s experience confirms our view that this adjustment is likely to weigh on GDP growth.”

2010 U.S. Census Shows Slowest Population Growth in 70 Years

Thursday, January 6th, 2011

2010 U.S. Census Shows Slowest Population Growth in 70 YearsNow that the long-awaited data from the 2010 Census has been published, the states are learning which places will gain congressional seats and precious electoral votes – a circumstance that could impact the outcome of the 2012 presidential election.  The U.S. Constitution requires a census count every 10 years to accurately reflect population shifts in the nation and determine congressional reapportionment as the states divide the House of Representatives’ 435 seats.  Inevitably, Democrats and Republicans will squabble over redistricting as states gaining or losing seats draw new districts.

“Many of the population increases are expected in Republican-leaning states in the South and West, while traditional strongholds of the Democrats in the North and Midwest are expected to lose population,” noted Keating Holland, CNN’s polling director.  Additionally, because Republicans in several states took control of the legislatures from Democrats in the mid-term elections, they will have significant control over how the districts are redrawn.

Ohio and New York each will lose two Congressional seats.  Poised to lose a single seat are Illinois, Iowa, Louisiana, Massachusetts, Michigan, Missouri, New Jersey and Pennsylvania.  California will retain its 53 Congressional seats – the largest in the nation.  States that will pick up seats include Florida, Arizona, Georgia, Nevada, South Carolina, Utah and Washington.

According to the U.S. Census Bureau,  the data gleaned will “directly affect how more than $4 trillion is allocated to state, local and tribal governments over the next 10 years.”  If preliminary estimates hold true, the 2010 census will reveal that America’s population growth fell to its lowest level in 70 years. Demographers believe the official 2010 count will be approximately 308.7 million, putting U.S. growth at nine percent, the slowest growth since the 1940 census.  During that decade, the Great Depression slashed previous population growth rate by more than half, to 7.3 percent.  The U.S. is still growing quickly relative to other developed nations.  The population in France and England each increased approximately five percent over the past decade; Japan’s population is largely unchanged and Germany’s population is declining.  China grew at about six percent; Canada’s growth rate is more or less 10 percent.