Whither the Middle Class? Jared Bernstein Economic Policy Institute jbernstein@epi. org
Real Economy • It’s official—recession, that is. • 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
Employment Declines Across Sectors Source: Bureau of Labor Statistics
Source: Bureau of Labor Statistics
Source: Bureau of Labor Statistics
Source: Bureau of Labor Statistics
Source: Bureau of Labor Statistics
Source: EPI analysis of Census Bureau data
Source: EPI Analysis of BLS data and Goldman-Sachs unemployment rate forecasts
Real GDP and Unemployment: 2008 q 1 -2009 q 4 Source: Goldman Sachs Forecasts
Source: Mark Zandi, Moody’s economy. com
Source: Mark Zandi, Moody’s economy. com
Un-Real Economy • Financial Markets: Dow, Nasdaq, S&P 500, Russell 2000…all down about 40% ytd. • But: good news…Ted Spread responding (4. 6 10/10; 2 11/7)? • 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 1990 s). • 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)
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