Sunday, June 26, 2011 this... (#2)

Writing at about two weeks ago, Chrystia Freeland noted that
[n]early 14 million Americans — 9.1 percent of the working population — are unemployed. That’s just a couple of a million shy of the populations of Greece and Ireland, Europe’s two problem children, combined. Another 8.5 million would like to work full time, but can only find part-time jobs. A further 2.2 million have been so discouraged by the grim labor market that they have given up looking for jobs altogether.

It is hard to blame them — those still actively looking for work have been unemployed for an average of 39.7 weeks.
Even at that, current projections by the Fed of future unemployment, already only slightly heartening, may be too rosy, reports Zachary Roth at
The Fed said [Wednesday] it expects joblessness, currently at 9.1 percent, to come down by almost 2 full percentage points by the end of 2013. But it also said it expects GDP growth to average around 3.4 percent during that period.
The problem is, there is a formula that economists use that relates unemployment to economic growth. And according to that formula, that GDP growth will cut unemployment by no more than about 0.5 percentage points. So even two and a-half years from now, instead of the still-high 7.1% unemployment the Fed projects, it could be about 8.6% - that is, if things go well.

The effect on the public has been devastating and one big, largely ignored, cause is that, as Roth reported earlier, companies are making record-busting profits and have unprecedented amounts of cash, but they are doing nothing with it except paying extra dividends to stockholders. That is, they have the money to spend on hiring and investment, but they simply are not doing it; not spending, not investing, not hiring. Just amassing while the number of "99ers," those who have exhausted all their unemployment benefits, grows.

Despite the jobs crisis, Freeland says, the focus in Washington and the media has turned to deficit reduction and spending cuts. But she uses that as a way of moving on to what she accurately calls a "more chilling" prospect:
Perhaps U.S. business is learning to get by just fine, thank you, without middle-class U.S. consumers. And while that may be good news for chief executives and shareholders, it could be the beginning of a new and socially wrenching political logic that leaves the great American middle behind. ...

[A] new white paper by Ad Age, the industry’s trade journal, argues that growing income inequality means the only buyers who count are those at the top.

“Simply put, as the discrepancy between the rich and poor has become more and more stark, a small plutocracy of wealthy elites drives a larger and larger share of total consumer spending,” the paper concludes, citing research that shows the top 10 percent of U.S. households account for nearly 50 percent of all consumer spending. “It appears that mass affluence may be a thing of the past — and that luxury marketers should reconsider how their products appeal to elite consumers.”
Ever wonder why there are so many commercials that come on like everyone can afford, say, a Lexus? Now you know why: It's because everyone that corporate America gives a shit about, can.

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