Latest figures show slowing economic recovery

Hopefully, the weather this weekend will be a lot better than the economic news.

The government reported this morning that GDP growth slowed dramatically in the second quarter.

“The United States economy expanded at an annual rate of 2.4 percent in the second quarter,” according to the latest Commerce Department report. That was after expanding 3.7 percent in the previous few months.

Since most economic forecasters are predicting even slower growth for the second half of the year, generally around a rate of 1.5 percent. At that rate it will take years until the economy returns to anything like the level it was at before the financial crisis hit.

Adding to the bad news was the latest foreclosure data.

“In the first half of 2010,” McClatchy reports, “More than 1.6 million U.S. properties were hit with foreclosure filings, which include bank repossessions, default notices and auction sale notices. That’s up eight percent from the first six months of 2009 and puts the U.S. on pace to top three million filings this year.

“From the Bush administration’s HOPE for Homeowners program to the TARP-funded HAMP program,” McClatchy said, “community groups, consumer advocates and homeowners themselves say anti-foreclosure programs have been largely ineffective because banks don’t have a strong incentive to modify loans that favor them financially.”

The housing crisis, it seems, has created still another problem. Evidence is piling up that it has become a major contributor to the unprecedented lack of mobility on the part of American workers.

An article in the Washington Post noted that “with many people locked in homes by underwater mortgages, only 1.6 percent of Americans moved between states in a one-year period that ended in March 2009 – a labor stagnation not seen in half a century.”

“In the past, people tended to move where the jobs are,” said Assistant Treasury Secretary Alan Krueger. “Now it is necessary to have more of a strategy to move the jobs and create new jobs in areas where the people are.”

The labor movement and its allies, of course, have been saying that massive job creation programs are needed to get the nation out of its worst economic crisis since the Great Depression.

Progressives have also been saying that were it not for the job creation that resulted from President Obama’s first stimulus program, the nation might have already slipped into a full-scale depression.

Banks and financial institutions, however, have not given credit to job saving and job creation programs. There have even been a number of Wall Street-funded studies lately that try to say the taxpayer bailouts of Wall Street are the main reason a depression was avoided.

Dean Baker of the Center for Economic and Policy Research has challenged the line of reasoning in those Wall Street studies. “It effectively assumes that if we did not do the bailouts, that we would have done nothing, even as the financial sector melted down.

“This is comparable to doing an analysis of the benefits of eating chicken where the counterfactual is that people are eating nothing. Needless to say, we would find very large benefits to eating chicken in such a study,” he said.

The Republican and conservative agenda, meanwhile, continues to put forward no solutions to the problems reflected in this week’s poor economic data or the economic crisis, in general.

In an interview, Paul Ryan, R-Wis., was asked what Republicans would do for the economy. “I’d revisit some of the major issues over the last year. Health care, energy, taxes, financial regulation,” he said.

“Ah,” said Mark Thoma, professor of economics at the University of Oregon in Eugene. “So his solution to uncertainty is to create even more uncertainty about the policies that will be in effect next year?”

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John Wojcik
John Wojcik

John Wojcik is Editor-in-Chief of People's World. He joined the staff as Labor Editor in May 2007 after working as a union meat cutter in northern New Jersey. There, he served as a shop steward, as a member of a UFCW contract negotiating committee, and as an activist in the union's campaign to win public support for Wal-Mart workers. In the 1970s and '80s he was a political action reporter for the Daily World, this newspaper's predecessor, and was active in electoral politics in Brooklyn, New York.