Transcript What do we know, what have we learned? Michigan, US, and Obamanomics Jared Bernstein Economic Policy Institute MLHS Annual Meeting [email protected].

What do we know, what have we
learned? Michigan, US, and
Obamanomics
Jared Bernstein
Economic Policy Institute
MLHS Annual Meeting
[email protected]
Real Economy, macro
• It’s official—recession, that is…but you knew
that.
• Consumer: retrenching, big time.
• Investment: squeezed on credit and profit
sides
• Exports/Imports: Maybe, maybe not…
• Government: most reliable source of short
term growth?
Source: Bureau of Labor Statistics, EPI Employment Projections
Nov-08
Oct-08
100
Sep-08
Aug-08
Jul-08
Jun-08
May-08
Apr-08
Mar-08
Feb-08
Jan-08
Dec-07
Nov-07
Oct-07
Sep-07
Aug-07
Jul-07
Jun-07
May-07
Apr-07
Mar-07
Feb-07
Jan-07
Monthly change in employment (thousands)
Total and Private Payroll Employment, Jan. 07 - Nov. 08
200
Total
Private
0
-100
-200
-300
-400
-500
-600
Employment Declines Across Sectors
Source: Bureau of Labor Statistics
Unemployment and Underemployment, Jan. 07 - Nov. 08
Nov. 08: 12.5%
Unemployment
12%
Underemployment
10%
8%
Oct. 08: 6.7%
Feb. 08: 8.9%
6%
4%
Source: Bureau of Labor Statistics
Nov-08
Oct-08
Sep-08
Aug-08
Jul-08
Jun-08
May-08
Apr-08
Mar-08
Feb-08
Jan-08
Dec-07
Oct-07
Sep-07
Aug-07
Jul-07
Jun-07
May-07
Apr-07
Mar-07
Feb-07
Jan-07
0%
Nov-07
Feb. 08: 4.8%
2%
Job Growth
United States
6%
4%
Michigan
4,2%
2%
0%
-0,9%
-1,7%
-2%
-4%
-6%
-8%
-8,3%
-10%
March 01-Dec 07
Dec07-Oct08
Unemployment rates,
January '00 - October '08
10%
8%
9.3%
Michigan
6%
4%
2%
0%
United States
Real Median Income, Working-Age Households,
1989-2007
$60,000
Median Income, 2007 Dollars
2000: $58,555
$58,000
$56,000
2007: $56,545
$54,000
$52,000
1993: $50,806
$50,000
1989
1990
1991
1992
1993
Source: Bureau of Labor Statistics
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Median household income , 1974-2007
U.S. ($50,233)
Median income (2007 dollars)
$60 000
Michigan ($49,370)
$40 000
United States
$20 000
Michigan
Yearly Changes in Average Weekly and Hourly Earnings,
Jan. 07 - Oct. 08
3%
Average Hourly Earnings
Real change from previous year
Average Weekly Earnings
2%
1%
0%
-1%
-2%
Source: Bureau of Labor Statistics
Oct-08
Sep-08
Aug-08
Jul-08
Jun-08
May-08
Apr-08
Mar-08
Feb-08
Jan-08
Dec-07
Nov-07
Oct-07
Sep-07
Aug-07
Jul-07
Jun-07
May-07
Apr-07
Mar-07
Feb-07
Jan-07
-3%
Job Seekers Per Opening, Jan. 07 - Oct. 08
3.5
October 2008:
3.3 job seekers per opening
Job Seekers Per Opening
3.0
2.5
January 2007:
1.6 job seekers per opening
2.0
1.5
Source: Bureau of Labor Statistics
Oct-08
Sep-08
Aug-08
Jul-08
Jun-08
May-08
Apr-08
Mar-08
Feb-08
Jan-08
Dec-07
Nov-07
Oct-07
Sep-07
Aug-07
Jul-07
Jun-07
May-07
Apr-07
Mar-07
Feb-07
Jan-07
1.0
Change in Average Real Family Income Following Peak Years,
by Selected Income Quintiles
102
100
2000 Middle fifth
98
Peak year = 100
-3%
1989 Middle fifth
96
-5%
94
2000 Lowest fifth
92
-8%
1989 Lowest fifth
90
-10%
88
Peak year
1
2
Years following peak year
Source: EPI analysis of Census Bureau data
3
4
Average Income of Bottom and Middle Fifths, 2000-2009 (Forecast)
$17,500
$62,000
$61,000
$16,500
$60,000
$16,000
$15,500
$59,000
$15,000
$58,000
$14,500
Bottom Fifth
2007 - 2009:
Middle Fifth: $3,355 lost (-5.5%)
Bottom Fifth: $1,128 lost (-7.0%)
Bottom Fifth (Forecast)
$14,000
Middle Fifth
Middle Fifth (Forecast)
$13,500
$57,000
$56,000
2000
2001
2002
2003
2004
2005
Source: EPI Analysis of BLS data and Goldman-Sachs unemployment rate forecasts
2006
2007
2008
2009
Average Income of Middle Fifth (2007 Dollars)
Average Income of Bottom Fifth (2007 Dollars)
$17,000
Poverty Rate, 2000-2009 (Forecast)
16%
Historical
14%
Forecast
12%
Poverty Rate
10%
8%
6%
4%
2%
0%
2000
2001
2002
2003
2004
Source: EPI Analysis of BLS data and Goldman-Sachs unemployment rate forecasts
2005
2006
2007
2008
2009
Employment Projections, With and Without Stimulus Package
145
With Stimulus
2012 Q4: 144 million
Payroll Employment (Millions)
No Stimulus
140
135
2012 Q4: 140 million
130
Stimulus creates 4 million jobs by Q4 2012
125
2005
2006
2007
Source: Mark Zandi, Moody’s economy.com
2008
2009
2010
2011
2012
Unemployment Projections, With and Without Stimulus Package
12
With Stimulus
10
Unemployment Rate
2012 Q4: 7.6%
No Stimulus
8
6
4
2012 Q4: 5.5%
2
Stimulus lowers unemployment by 2.1% in Q4 2012
0
2005
2006
2007
Source: Mark Zandi, Moody’s economy.com
2008
2009
2010
2011
2012
Un-Real Economy
• Financial Markets: Dow, Nasdaq, S&P
500, Russell 2000…all down about 40%
ytd.
• But: good news…”Ted Spread” responding
• Housing: some signs bottom in sight, but
no signs re uptick…prices still
falling…inventory overhang;
• TARP: Certainly not a confidence builder
yet.
• Fed: pushing on string but not giving up.
Pres/VP Elect
• Fiscal constraints?
• Deficit could go as high as 6% of GDP, but
debt around 40% (avg 46% in 1990s).
• Must he alter his long-term plans--hth
care/energy?
• There is a time for budget austerity; this
ain’t it.
• Middle-class, poor, labor agenda (EFCA,
min wg, UI reform, OSHA, etc…)
Their Agenda
• Morph his recovery package with House
D’s (Making Work Pay tax cuts; new jobs
tax credit; mortgage relief; small biz, UI)
• Manage TARP
• Tax agenda
• Energy/Health Care
• Infrastructure (who gets the jobs?)
• Regulation (Cooper Union speech)
What Have We Learned?
•
•
•
•
•
Markets
Ineq
Public investment
No more TBTF
Financial markets
Learned…cont.
•
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Budget priorities
Supply-side
Amply funded gov’t
Shampoo economy
Better economists