Economy

World remains glum about economic prospects

9/17/14

By Bruce Stokes, Special to CNN

Editor's note: Bruce Stokes is the director of the Pew Research Center’s Global Economic Attitudes. The views expressed are solely those of the author.

Six years since the beginning of the Great Recession and publics around the world remain glum about the state of their economy and prospects for an economic recovery. In most nations, people say their country is heading in the wrong direction and most voice the view that economic conditions are bad, according to a new 44 country survey by the Pew Research Center conducted among 48,643 respondents from March 17 to June 5, 2014.

A global median of 60 percent see their country’s economy performing poorly, largely unchanged from last year. People in advanced economies, such as the United States and France, are slightly more negative than those in emerging markets. Only in developing economies is there some semblance of satisfaction with current national economic performance: 51 percent voice the view that their economy is doing well.

Those who see their economy in the most negative light are the Greeks (97 percent say economic conditions are bad), Italians (96 percent), Spanish (93 percent) and Ukrainians (93 percent). In the U.S., 58 percent are of the opinion that the American economy is not doing well; only 40 percent say its performance is good. Those most positive about their national economic conditions are the Chinese, Vietnamese and Germans, where more than 80 percent are upbeat.

In a half dozen countries, economic attitudes have soured in the last year. In 2013, a majority of Brazilians (59 percent) said their economy was doing well. Today only one third hold this view, a 27 percentage point drop in economic confidence. With a presidential election coming up in October, this cannot be good for the incumbent government. There has also been a 15 point decline in positive views of the economy in Venezuela and 13 point drop-offs in Argentina and Malaysia.

But, over the last year, the economic mood has brightened in a number of nations. In 2013 in the United Kingdom and Pakistan, only 15 percent and 17 percent of the public, respectively, thought the economy was doing well. In 2014, British assessments of their economic conditions are now up 28 points. Pakistanis’ economic frame of mind has improved by 20 points. Double digit improvements in economic mood are also found in Uganda, Israel, Indonesia, South Korea, Russia, Chile and Germany.

Expectations for the future of national economies are a bit more positive overall. A global median of 46 percent sees their economy picking up over the next year.

Regionally, people in Africa and Latin America are the most hopeful about the coming year, while nearly half of Asians agree. But only a quarter of Europeans expect economic conditions to improve.

The most optimistic nation is China (80 percent). But there are also high expectations in the Latin American nations of Peru and Colombia. The greatest rise in economic optimism has been in the U.K., where 45 percent are optimistic – a 23 point rise in a hopeful view of the future since 2013. A majority of Indonesians and Ugandans also expect their economy to perform better over the next year, with such confidence up 18 points and 15 points, respectively, since last year.

The greatest pessimists can be found in Greece, France, Lebanon and the Palestinian territories.

Americans are almost evenly divided about the economy’s trajectory: 35 percent are hopeful of improvement, 33 percent expect more of the same and 30 percent see conditions worsening. But there is a partisan divide in these views: 54 percent of Democrats expect economic conditions to improve, while just under half of Republicans anticipate that they will worsen.

But the greatest nosedive in optimism about the economy over the next 12 months has been in Japan, where just 15 percent foresee their economy improving, down from 40 percent who were hopeful a year ago, hardly an endorsement of Abenomics.

The public mood about the economy reflects recent economic conditions. Global growth slowed in the first quarter of 2014, immediately prior to the survey. At 2.75 percent, it was down a full percentage point from the growth experienced in the second half of 2013, according to the International Monetary Fund. Some nations, especially advanced economies, such as Japan, Germany, Spain, and the U.K., performed better than expected. But their success was outweighed by disappointing growth in China and the U.S. And weak demand in those economies sapped economic growth in emerging markets, where success is often driven by exports to the U.S. and China.

So, until economies pick up across the board, it may be difficult to see the global economic mood improve much. But therein lies much of the problem. As long as people are glum about the economy, they may be reluctant to spend and invest. And such reluctance may make it harder for the economy to attain lift off speed.


A Look Back at Lehman Brothers and Where We Stand Six Years After the Financial Crisis

9/15/14

September 15, 2008 -- a day that rocked the American economy to its core after Lehman Brothers, then one of the nation’s largest investment banks, filed for bankruptcy. The largest filing in history, Lehman Brothers’ bankruptcy sent shockwaves through the global markets and left families and businesses reeling.

In the months before the President took office, Americans watched as the private-sector cut 800,000 jobs a month, the housing market cratered, and the American auto industry threatened to collapse. That economic turmoil -- the severity of the challenges we faced in 2008 -- stand in stark contrast to where we are now, six years after the Great Recession.  Now, thanks to American workers and businessmen and women, our economy has added 10 million jobs and is growing stronger by almost every economic measure.

While there is more work to do to keep our economy moving forward, take a look back with White House Administration officials who shared the critical moment and key decisions the President made in three different areas of the economy to get us to where we are today. Then slide across the charts to see how far we’ve come in the last six years.

"The Epicenter of That Crisis": The Housing Market

The collapse of the housing market sparked the Great Recession, driving down home prices, halting construction on new homes, and forcing millions of families into foreclosure.

Listen as Shaun Donovan, former Secretary of Housing and Urban Development, describe how they created “most comprehensive, aggressive housing strategy that the country has ever seen” within the first few weeks of the Obama administration. There’s much more work to do but now, home prices are rising at a fast pace and homebuilders are breaking ground on 50,000 more homes each month than they were in 2009.

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Growing Our Economy and Strengthening Our Financial System

9/15/14

Six years ago today, Wall Street was rocked by a financial crisis that culminated in the bankruptcy filing of Lehman Brothers, the largest in U.S. history. The financial crisis resulted in the longest and deepest recession the American economy had experienced in 60 years. While more work remains to continue digging out of the deep hole that was left by the crisis, this week offers a chance to reflect on the significant progress that has been made since then in strengthening the economy and reforming the financial sector.

To understand how far we have come, it is important to remember the dark days that marked the beginning of the financial crisis. In the span of a few weeks in 2008, many of our nation's largest financial institutions failed or were acquired to avoid insolvency. Capital markets froze, and the availability of credit for mortgages, student, auto, and small business loans was drastically reduced. The recession ultimately eliminated nearly 9 million jobs, threatened the American auto industry, and shrank the economy by hundreds of billions of dollars. The crisis was the result of many factors, including an overvalued housing market, predatory lending practices, thinly capitalized financial institutions that took big risks, and a regulatory system that was outdated and unequipped to meet modern challenges.

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Some good news out of Washington

9/8/14

For more What in the World watch Sundays at 10 a.m. & 1 p.m. ET on CNN

By Global Public Square staff

We’re always on the lookout for good news – and we have some important good news this week, and it's actually coming out of Washington, despite all the polarization. Of course, true to form, the two parties disagree about this piece of news. So what is it?

Well, the nonpartisan Congressional Budget Office recently released its semi-annual outlook of the U.S. economy over the next decade. And the CBO's headline is that things are going better than expected. We are firmly in an economic recovery with substantially lower federal deficits, low interest rates and, we would add, little danger of inflation.

The CBO says that the federal deficit – the gap between revenues and spending – is projected to be $506 billion in 2014. That is just 2.9 percent of GDP, slightly lower than the average shortfall over the last four decades.

Keep in mind that in 2009 the federal deficit was 9.8 percent of GDP. The current number is much better than most believed was possible just a few years ago. 

Nobel Prize winning economist Paul Krugman argues that the debt and budget crises were "imaginary" and have "fizzled." He says the new CBO projections are further proof that the "debt apocalypse has been called off."

Given the aging population, the U.S. debt to GDP ratio will increase after the next decade, Krugman says. But, he notes that health care costs, which play by far the largest role in doomsday budget scenarios, have slowed dramatically.

In 2019, the CBO projects that the federal government will spend $95 billion dollars less on Medicare than it had anticipated spending on the program just 4 years ago. The New York Times' Upshot blog points out that $95 billion is more than the government will spend on that year on welfare, unemployment insurance, and Amtrak combined.

Sounds great, right?

Okay, let's check out the view from the worry warts. The long view, they say, is not so promising. Federal spending on entitlement programs, they argue, are unsustainable. The federal debt – that is the debt held by the public as a percentage of GDP – will reach 74 percent by the end of the fiscal year. That is about twice what it was at the end of 2007, when the federal debt was just 35 percent of GDP. And that number is projected to be more than 100 percent of GDP in 25 years.

According to the CBO, that is "a level seen only once before in U.S. history, just after World War II."

Rob Portman, a Republican Senator from Ohio, warns that the retirement of 77 million baby boomers will create an "entitlement meltdown." By 2030, he says, there will only be two workers to support each retiree, whereas there were five workers to support each retiree in 1960.

What's more, 85 percent of future deficit increases between now and 2024 will be driven by three things – interest payments on federal debt, Social Security, and spending on health care programs like Medicare and Medicaid. Given that projection, discretionary spending – which includes defense, housing assistance, infrastructure, education – would be whittled down to just 5.2 percent of GDP by 2024. That would mean massive cuts in all these programs.

Keep in mind that such spending accounted for 6.8 percent of GDP in 2014 and has averaged about 8.3 percent over the last 40 years, according to the CBO. So we're already way down. We can't keep cutting the programs that will ensure our future prosperity.

Now, the final piece of good news. It wouldn't take all that much to fix the situation. The CBO estimates that the U.S. could stabilize the debt to GDP ratio by finding tax increases or spending cuts equivalent to just 1.2 percent of GDP.  How about a compromise that does both at 0.6 percent of GDP each?

The bad news, of course, is that even this modest, commonsensical solution is going to go nowhere in Washington – for now at least.

 


Weekly Address: Time to Give the Middle Class a Chance

9/6/14
Vice President Biden Delivers the Weekly Address

Vice President Joe Biden tapes the Weekly Address in the Eisenhower Executive Office Building, Sept. 5, 2014. September 5, 2014. (Official White House Photo by Lawrence Jackson)

In this week’s address, the Vice President discusses our continued economic recovery, with 10 million private sector jobs created over 54 straight months of job creation. Yet even with this good news, too many Americans are still not seeing the effects of our recovery.

As the Vice President explains, there’s more that can be done to continue to bolster our economy and ensure that middle class families benefit from the growth they helped create, including closing tax loopholes, expanding education opportunities, and raising the minimum wage.

Transcript | mp4 | mp3

5 Things You Need to Know About Women and the Economy

9/5/14

Today’s employment report underscores the fact that the economy is continuing to recover, and employment is continuing to increase. Women have shared in these gains, with female employment increasing by 4.1 million jobs in the last 54 months, and the fraction of discouraged workers and workers experiencing long-term unemployment continues to fall. Across industries, women’s employment gains look relatively similar to previous periods of strong employment growth. To further support the economy, and to ensure the workplace works for the 21st century economy, the President is encouraging Congress to act and using his own executive action to support policies that support a fair workplace for all workers -- including women.

Key Points about Women and the Economy

1. Women’s nonfarm employment has increased by 3.8 million jobs over the last 54 months, and 1.2 million in the last 12 months alone. Women’s employment tends to be less cyclical than men’s, largely because women are less likely to work in industries where employment greatly fluctuates with the business cycle. The recent recession followed that pattern, and women lost far fewer jobs than men. Between December 2007 and February 2010 women lost 2.7 million jobs, while men lost 6.1 million. However, the unusual declines in state and local government during the recovery -- a loss of 744,000 jobs between August 2008 and January 2013 were particularly tough for women who lost 65 percent of those jobs. Over the past year state and local government employment has stabilized and begun to recover adding back 123,000 jobs since January 2013. Since February 2010, women and men have recouped 4.1 and 5.9 million private sector jobs, respectively. This has raised the share of private sector workers who are women from 46.9 percent prior to the recession to 47.9 percent this past August.

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The Economy that Built 10 Million Jobs

9/5/14

10 million -- that’s the number of jobs American businesses have added over 54 straight months, the longest streak of private-sector job growth in American history. 10 million marks more than strengthening job growth, it is a sign of the industry of the American worker and the strength of an economy that made 10 million jobs possible.

Just look at how far we’ve come over the past five years. When President Obama took office in 2009, the country was in the midst of the Great Recession -- the economy was shedding jobs by the hundreds of thousands, the housing market had hit rock bottom, and the American auto industry was on the brink of collapse. But President Obama took action, and now -- thanks to the grit and resilience of American workers and business owners -- our economy has added more than 10 million jobs and is growing day by day.

From breaking ground on new homes to selling American goods abroad, the growing strength of key economic sectors helped make 10 million jobs possible. While there’s more work to do, take a look at a few of these critical pillars of our economy to see where we stood when President Obama took office and where we are now.

1. Auto workers are assembling nearly 800,000 more cars each month than in 2009.

 
 
 

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The Employment Situation in August

9/5/14

With today’s report, the economy has now added 10 million private-sector jobs over 54 straight months of job growth. This figure is a marker of the progress that has been made, but also a reminder that more must still be done to create jobs, especially for the long-term unemployed, and grow the middle class. Although the pace of job gains in August was below recent months, the broader trends are moving in the right direction. To continue to support the progress our economy has made, the President will act wherever he can to create good jobs, facilitate investments in American infrastructure and manufacturing, and make sure that hard work pays off with higher wages.

FIVE KEY POINTS IN TODAY’S REPORT FROM THE BUREAU OF LABOR STATISTICS

1. The private sector has added 10 million jobs over 54 straight months of job growth, extending the longest streak on record. Today we learned that total nonfarm payroll employment rose by 142,000 in August, mainly reflecting a 134,000 increase in private employment. Private-sector job growth was revised up for July and down for June for little total revisions. Over the past twelve months, private employment has risen by a total of 2.4 million.

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New Report Shows that Slow Health Care Spending Growth Continued in 2013, While Near-Term Trends Remain Encouraging

9/3/14

New estimates out today from the Office of the Actuary at the Centers for Medicare and Medicaid Services show that national health expenditures rose at historically slow rates in 2013, continuing the exceptionally slow growth in health costs seen in recent years. This slow growth, which is thanks in part to the Affordable Care Act, is already generating major benefits for both the Federal budget and our economy.

The near-term outlook in today’s report is also encouraging. Consistent with recent surveys reporting that millions of Americans gained health insurance coverage over the Affordable Care Act’s initial open enrollment period, the Actuaries project a sharp reduction in the number of uninsured Americans over the next few years due to the new coverage options made available under the Affordable Care Act. Unsurprisingly, the Actuaries predict that this dramatic expansion in coverage and access to care will temporarily increase growth in aggregate health care spending. But, consistent with a variety of incoming data, their projections imply that underlying growth in health care prices and per-enrollee spending – the factors that determine the premiums and cost-sharing that families face – will remain subdued over the next few years.

Over the long term, health expenditure projections are always more uncertain. While the Actuaries project that the recent slowdown will largely dissipate as economic recovery continues, the balance of the evidence implies that much of the recent health care spending slowdown has been driven by structural changes, which suggests that a significant portion may persist. Because of the large size of the nation’s health care sector, if even a modest portion of the recent slowdown continues in the long run, it would have a transformative effect on the Federal budget, families’ budgets, and the economy as a whole. For example, even if as little as one-third continues, then, by 2023, national health expenditures would be $1,200 per person lower than if costs returned to their prior trend. In the years ahead, the Administration will continue its efforts to create a health care delivery system that consistently provides efficient, high-quality care, with the goal of making that transformation a reality.

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Made in America: 11.3 Million Jobs

9/2/14

The innovation and industry of the American worker are the foundations of the world’s largest economy and strongest middle class. A key part of what makes our economy so dominant is what we build here in America. Our electronics, medical equipment, cutting-edge machines, and top-of-the line vehicles are just some of the growing number of exports that are strengthening our economy and creating good-paying jobs here at home.

In fact, a new report from the Department of Commerce shows that America’s goods and services exports directly supported more than 11.3 million American jobs in 2013, with goods exports alone supporting about 7.1 million of those jobs in communities across the country. Texas exports, for example, supported nearly 1.1 million jobs, more than any other state. The city of Houston topped all other metropolitan areas, creating $115 billion in goods exports.

Check out this map to see how many people are making a living thanks to products that are made in America:

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