Economic Growth

New American Contract aims to challenge conventional wisdom about growth-oriented public policy and the path to sustained economic recovery. Our Policy Director Michael Lind's "The Case for Goliath," a new piece in Democracy: A Journal of Ideas, looks to an oft-overlooked element of the New Deal to challenge the still-pervasive assumption that deregulated, maximally-competitive markets produce the best outcomes for average Americans...

...Unless you're China, that is. The PRC's robust stimulus package, ingrained tradition of economic intervention, and still-immature energy market have made it a serious contender in the race to become the world leader in renewable energy. 

In a recent piece in The Christian Science Monitor, "China's green leap forward," author Peter Ford outlines the Chinese government's efforts to stimulate the green energy sector and encourage foreign investment in the burgeoning field. China already makes more than a third of the world's solar cells, he notes, and by next year the country will be the world's largest market for wind turbines...

In the video below, Wall Street Journal reporters Jonathan Weisman and Neil King Jr. report that during the daily economic briefing Obama has asked his economic advisers about U6, otherwise known as the effective unemployment rate.

The discussion on the effective unemployment rate grew when Leo Hindery Jr. started sending around his monthly calculations of the effective unemployment rate. (July's can be found here.)

According to Hindery, 30 million Americans are under- or unemployed. This is hardly a foundation for a healthy economic recovery...

Although layoffs in July slowed to their lowest levels since August 2008, and there were other positive developments in the numbers, several worrying trends emerged in the latest monthly jobs report from the Bureau of Labor Statistics.

In particular, the increasing duration of unemployment stints and the overall labor participation of the U.S. population are causes for concern. Average weeks unemployed now stands at 25.1--nearly six months! And one-third of Americans officially out-of-work have been without jobs for more than 27 weeks. A year ago, that rate was 18 percent. Moreover, despite slight drops in the official and effective unemployment rates, the overall share of Americans with jobs continues to trend downwards...

There's a lot of talk about unemployment nowadays, and for good reason; but to get a full sense of the toxicity of this recession, it's also worth thinking about what life is like for those people who still have jobs. Generally speaking, the answer is about what you'd expect: their wages are stagnating. That is, unless you work in government.

The Case-Shiller home price index for May 2009 offers some hopeful signs of incipient recovery in the U.S. housing market. That said, there are enough caveats in the data to comfortably fill an unsold Las Vegas McMansion.

The New York Times, Wall Street Journal, and Financial Times all reported that the widely-watched index registered a .5% April-to-May gain, the first monthly increase in almost three years. Although the May '09 figure was still down 17% from May 2008, the media outlets took the month-over-month jump as a sign that the housing market may be stabilizing. Eight cities in the index--which measures average home sale prices in the 20 largest U.S. metro areas--registered price increases in May, up from four in April and one in March. The worst-performing markets remain the over-built Sun Belt cities, Las Vegas and Phoenix. (The Times has a nice graphic showing price changes in all 20 metro regions.)...

Today the Bureau of Labor Statistics released an interesting briefing looking at the way in which medical care benefits are distributed across different types of workers. The take away point? It's good to be in government.

Generally, public sector workers have considerably more access to health care than do private sector workers (88 percent vs 71 percent for all workers; 99 percent versus 86 percent for full-time workers). In both sectors, managers have greater access to medical care than service workers, but the disparity between managers and service workers is very different between the two. In the public sector, 81 percent of service workers have health benefits versus 90 percent of managers; in the private sector, just 46 percent of service workers have this access, as do 86 percent of managers. That's a big gap...

At the S&ED, it is imperative that the United States get one message across: we must replace consumption driven by increasing indebtedness in the United States and excess production driven by government policy in China as the major drivers of world economic growth. Without a change in US and Chinese policy, we will set the stage for global stagnation. Unlike times past, US consumers are simply unable to pull the world out of this recession...

It appears that Chinese stimulus in the second half will be more of the same:

Chinese President Hu Jintao has called for efforts to stick to the government's proactive fiscal policy and moderately easy monetary policy to sustain the economic growth as the country's economy is at a critical moment and the foundation for recovery is not solid.

The central leadership clearly supports more stimulus, but it's probably not what many economists or the IMF have in mind...

Yesterday the Bureau of Labor Statistics released a dataset on regional wages and employment across the country for Q4 2008. The numbers largely tell the same story that we've been seeing for months: from December 2007 to December 2008, employment declined in 285 of the 334 largest U.S. counties, and average weekly wages increased by a measly 2.2 percent over this period (that's without adjusting for inflation, remember).

But what's this? There's one seeming gem of good news in the report: workers in St. Louis City, Mo. have seen a whopping 56.8 percent increase in average weekly wages over the year in question. At first glance, this is a stunning number. Could it be that the Gateway City is beating the recession?...