11.9.12

SECULAR STAGNATION.

Tom Blumer summarizes 43 Months of Depressing Misery.
President Obama’s failed stimulus program, brutally expensive and common law-shredding auto company bailouts, bankrupt “green energy” initiatives, and other exercises in “fundamentally transforming” the economy have extended a deep recession which predominantly traces its origins to decades of dangerous Democrat-driven housing policies, pervasive fraud against Wall Street and investors at Democrat crony-controlled Fannie Mae and Freddie Mac, and 2008 campaign promises by Obama and fellow Democrats which the nation’s entrepreneurs, businesspeople, and investors correctly saw as threats. The president’s and fellow party members’ bully-pulpit hostility directed at the productive (“You didn’t build that“), the regulatory regime’s unprecedented overreach, and the prospect of ObamaCare’s disruptive implementation have created an atmosphere of chilling uncertainty virtually guaranteeing that the nation’s economic malaise will continue as long as they control the levers of power.
The malaise might be longer than that, according to Mortimer Zuckerman.
The best single indicator of how confident workers are about their jobs is reflected in how they cling to them. The so-called quit rate has sagged to the lowest in years.

Older Americans can't afford to quit. Ironically, since the recession began, employment in the age group of 55 and older is up 3.9 million, even as total employment is down by five million. These citizens hope to retire with dignity, but they feel the need to bolster savings as a salve for the stomach-churning decline in their net worth, 75% of which has come from the fall in the value of their home equity.

The baby-boomer population postponing its exit from the workforce in a recession creates a huge bottleneck that blocks youth employment. Displaced young workers now face double-digit unemployment and more life at home with their parents.

Many young couples decide that they can't afford to start a family, and as a consequence the birthrate has just hit a 25-year low of 1.87%. Nor are young workers' prospects very good. Layoff announcements have risen from year-ago levels and hiring plans have dropped sharply. People are not going to swallow talk of recovery until hiring is occurring at a pace to bring at least 300,000 more hires per month than the economy has been averaging for the past two years.

Furthermore, the jobs that are available are mostly not good ones. More than 40% of the new private-sector jobs are in low-paying categories such as health care, leisure activities, bars and restaurants.
Mr Zuckerman -- for reasons different than those deployed by Paul Krugman -- also characterizes the situation as a "modern day depression", one ameliorated by the social spending that wasn't present in the 1930s.
These dependent millions are the invisible counterparts of the soup kitchens and bread lines of the 1930s, invisible because they get their checks in the mail. But it doesn't take away from the fact that millions of people who had good private-sector jobs now have to rely on welfare for life support.
He concludes with a macroeconomic policy prescription blending supply-side incentives with demand-side infrastructure spending, intriguingly, though, suggesting that the roads and bridges so built be subject to tolls.

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