Economic Growth

Louis Uchitelle's piece in today's New York Times parallels what New America Foudation experts, particularly Leo Hindery, have been saying for months: The Obama Administration's economic recovery plan represents tentative, ad hoc steps towards a national manufacturing policy, when a more comprehensive and sustained approach is needed.

Uchitelle outlines a litany of sobering statistics about the state of manufacturing in America: Two million jobs lost during this recession. A 17.3 percent decline in industrial production. A smaller share of GDP than every industrial nation, save France...

To Richard Bernstein, our economy looks like a California roll, fundamentally Japanese but with American characteristics. My question is how do you get the economy to look like an old-fashioned American casserole?

His op-ed in the Financial Times this morning lays out the argument for why we look like Japan. We have a tendency to create bubbles. When they burst we re-inflate them and exacerbate deflation.

The global economy has experienced during this decade the biggest credit bubble in our lifetimes, and virtually every industry in every country benefited. In fact, all the growth stories of the past decade (such as China, emerging market infrastructure, residential housing, hedge funds, private equity and commodities) are capital intensive investments that benefited from easy access to cheap capital. The global credit bubble seems to have created a global economic bubble...

The United States needs a manufacturing policy, according to Leo Hindery's testimony before the Senate Banking Subcommittee on Economic Policy this morning. The full text of his testimony can be found here. Or you can watch a full video of the session on Senate Banking's website (this may be better because you can see the Q&A).

Hindery's comments advocated not just a strategy, but a policy to make US manufacturing competitive. All other countries have such policies, and the US should too, argued Hindery...

In Forbes today, James K. Glassman sings the praises of the wireless telecoms industry. In the past decade, the sector has seen enormous growth in customers, minutes used, and employment, and the U.S. now has the most dynamic wireless industry of any nation in the world. Competition has exploded, as an array of agile firms and creative wireless plans have emerged to compete with giants AT&T and Verizon. "[T]he government should be considering the telecom sector for the economic equivalent of a Congressional Medal of Honor," Glassman writes.

Instead, the feds are considering antitrust action against the wireless industry...

America's "effective unemployment" rate is much higher than the headline number reported by the BLS - and the media is starting to catch on. Leo Hindery and Niko Karvounis have focused on the "jobless recovery" for months and after each unemployment report, Hindery re-calculates the effective unemployment rate for the month and sends it around to colleagues. In June it rose to 18.7%.

New America's Steve Clemons wrote on his blog that some administration officials have been more concerned about a GDP recovery and "green shoots" than about job creation. This is troubling given the job losses across the country and particularly in states like Ohio, where the president's approval ratings are slipping. More attention from the media on the effective employment and more pressure from the polls may be what is required to get the Obama admininistration to focus squarely on job growth...

It is hard to figure out what Treasury Secretary Geithner sees in our economic future.

Today's Financial Times quotes Geithner as saying this yesterday in London:

There is a very good chance for seeing the US economy and the world economy get back to the point when it is growing again over the next few quarters... Policy has been very successful in arresting and mitigating the force of the storm and we're starting to see a better basis for recovery...

One of the many sub-stories of this recession has been the severity with which unemployment and structural economic change has hit men. Indeed, back in May, Businessweek's Michael Mandel noted that in every age group, male unemployment is at or near a post-war high. "[F]or men, the labor market pain is now into uncharted territory," he wrote. That's still the case.

Today over at The Atlantic, Derek Thompson also writes about how this recession is a "mancession"--a term first coined by Mark Perry, a University of Michigan economist who concludes that "the difference between male and female unemployment is at a half-century high, with men taking a 2.5 percent lead. In the late 1970s and mid-1960s, it was women who were behind by that same margin."...

There is a sizable opposition to more stimulus, but not because people expect the economy to recover quickly. Most critics, like New America Fellow Jim Pinkerton, want to see large investments in the economy but see the first stimulus as a failure:

Obviously the "stimulus" was a a dud--and the rate that things are going, the next "stimulus," too, will be a dud. Deficit spending is valuable only if you get something more valuable in return for that spending. Otherwise, stimulus spending is just a ticket on the Argentina Express...

Jeffrey Immelt is the CEO of General Electric, one of America's largest and most consistently innovative companies--and in a speech before the Detroit Economic Club on June 26, he laid out GE's comprehensive vision of American economic renewal (full text here):

The main purpose of the speech was to announce the building of a new Manufacturing Technology and Software Center in Michigan, which Immelt says will create more than 1,100 jobs in the beleaguered state. According to Immelt, workers who used to build cars will now help develop cutting-edge energy, transportation, and health care technologies...

This morning on CNBC Steve Leisman argued that there may be a corporate profit led recovery. Higher profits will beget higher investment, and a virtuous cycle of growth, more consumer spending, and higher profits will ensue.

These are the factors he cites (from a Societe Generale research note)...