Brad Delong's Great Pic on GNP Growth & Presidents

To see more graphic representations by Delong on why Democrats are better than Republicans for the economy, click here.

Economy Going into Recession While U.S. Spends Billions Helping Iraqis

With the unemployment rate edging up and housing starts going sharply down, it is dawning on the geniuses in the Bush Administration that the economy is heading into a recession. This is bad news for Republicans. One of the things that Republicans wanted to argue in the 2008 campaign is that Bubble-Boy's tax cuts helped the American economy. If unemployment starts going up, that argument goes out the window.

As an article in the Washington Post points out, though, the upturn in unemployment is not being spread evenly throughout the economy. The following is from the Post article:

While economic fallout from the housing sector has spread, there are significant parts of the economy that are adding jobs, which has created a bifurcated labor market. The professional and business services sector added 43,000 jobs and health care added 27,900.

"If you're an IT person in Washington, D.C., or an engineer in San Francisco, you have your choice of jobs," said Tig Gilliam, chief executive of the staffing firm Adecco Group North America. "If you do construction, you're doing to have a hard time finding a job you want."

The data released yesterday underscore that assertion. In the past year, the unemployment rate for professional occupations barely edged up, to 1.9 percent from 1.8 percent. In the construction sector, the jobless rate rose to 9.6 percent from 7 percent.

Now, of course, BB's reaction to all this is to call for more tax cuts, most likely directed at his rich friends with a few bucks thrown in for working class Americans. This was the way he got his tax cuts in 2001 and 2003, you know, the ones that plunged the United States deeper in debt. Hopefully the Democratic Congress will resist that idea and, if tax cuts are indeed called for to stimulate the economy, will aim them at working class Americans.

While they are at it, they should start reminding Americans long and loud that the almost half a trillion dollars that BB and The Duck Hunter, (aka the Vice-President), spent in Iraq would have gone a long way to stimulate the construction industry. Think of the new schools that could have been built, new highways constructed, new mass transit systems produced, new high-speed wireless systems created. It boogles the mind. Instead we spent a lot of taxpayer money and priceless American lives trying to help Iraq. The Republican motto: Billions for Iraqis, nothing for working class Americans!

"Bush Economy" Heading for a Recession?

The economy is heading toward a recession. New home sales are down 8.5% since July. Prices of new homes have fallen 7.5% from a year ago. Credit is increasingly hard to get for consumers and businesses. All of these are signs that the economy is heading towards a recession.

Ever since Bush's reckless, radical tax cuts, we have heard from his supporters and apologists about how they have helped the economy. Actually, and this is something that presidents of both parties don't want to talk about, but the Federal Reserve Board has more control over the economy than any president. If the Fed makes more money available, it helps both consumers and businesses get loans. They use these loans to buy goods and services, thereby creating more jobs for Americans.

Under Greenspan the Fed basically allowed homeowners to turn their homes into ATM units. Americans borrowed on their equity to finance everything from home remodeling to a new vacation for the grandkids.

Naturally, since Greenspan is a Republican and since Bush is an idiotic Republican, no one thought about overseeing the financial institutions making these loans. As a result, we now have a wave of losses in the billions of dollars from risky loans. Consequently, we see financial institutions, who are apparently led by people who are not real bright given their past history, sharply cutting back on new loans.

If there is a recession, look for three things to happen. One is that Republicans like Bush will push for even more tax cuts under the rationale that we need to "pump" up the economy. Two, Democrats will do even better next year than anticipated. Three, illegal immigration will become even more potent as an issue because of economic insecurity among working class Americans.

Chinese Threaten to Dump Dollars if America Increases Pressure to Revalue Currency

Well, the chickens are coming home to roost in the Chinese hen house. The English newspaper, the Telegraph, is reporting that the Chinese government is threatening to dump American dollars if the United States continues to pressure the Chinese to revaluate its currency. The following is the first three paragraphs of the Telegraph's story:

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

The article notes that this threat plays into the campaign of Hillary Clinton who has said that foreign control of 44% of the U.S. Government's debt threatens our economic soverignity.

You can read the whole article here.

Akron Beacon Journal Article on Retail Employees' Pay

The front page of the Akron Beacon Journal's Business section had a story today, (2.25.2007), about retail jobs in Ohio. It points out that retail jobs are paying less and that pay for retail employees is not keeping up with other sectors of the economy. In Medina County, for example, retail jobs have increased but retail pay has declined by 10% according to the article. Ohio Senator Sherrod Brown is quoted as attributing at least some of the decline in pay for retail employees to that sector's lack of organized workers. Other factors cited in the article include technology, which is allowing retail establishments to eliminate jobs by use of such mechanisms as self-checkout stations.

What is interesting about this article is that one of the arguments made by supporters of free trade treaties such as NAFTA is that while manufacturing jobs may be lost, service sector jobs will step in and fill the void. Well, as this article shows, the pay for such jobs is much less than the pay for the lost jobs. This affects all of us, not just the workers involved. If lower paying jobs replace higher paying jobs, then workers won't have as much money to spend on things like entertainment, cars, groceries, dining out, and recreation. It means that professionals such as doctors, lawyers, and dentists may find that their clients don't have as much to spend of their services. It will affect construction jobs because people who don't have as much money can't spend as much on housing. It will affect governments, especially governmental bodies like school boards, who have to go back to voters on a regular basis for approval of tax levies. In short, when one section of the economy suffers, all of the economy may suffer.