------------------------- Via Workers World News Service Reprinted from the Aug. 19, 2004 issue of Workers World newspaper -------------------------
IS U.S. HEADING TOWARD STAGNATION? JOBS DATA REVERSES WALL ST. OPTIMISM
By Milt Neidenberg
Oops! They've done it again. How wrong can they get?
Wall Street pundits had expected a payroll growth of 215,000 new jobs for July. Instead, the Labor Department reported 32,000 jobs, the smallest increase since last December.
The government also revised its previous estimate for May and June downward by 61,000 jobs.
The July 2 Wall Street Journal reported that its survey of 55 forecasters predicted that the "U.S. economy will enjoy steady expansion for the rest of this year, thanks in part to industrial growth taking off, with unemployment falling and the inflation rate abating."
So what happened?
Prices are rising rapidly. Oil is $44 a barrel. Food, transportation, housing and other necessities are spiking. So is the cost of borrowing. The Federal Reserve Board raised interest rates again on Aug. 10.
The Standard & Poor's 500 stock index is off 4.3 percent for the year. It's at the lowest level since December.
The Dow Jones industrial average is down 6.1 percent for the year and at its lowest since last November.
And the NASDAQ composite index, reflecting the uncertainties in the technology sector, is down 11.3 percent. This is its lowest since August of last year.
How many billions of dollars shareholders have lost, mainly among the middle class, is unaccountable. And the markets continue to roil with uncertainty.
Federal Reserve Chair Alan Greenspan told the Senate Banking Committee on July 20 that "July seems to be somewhat better even though we are going through a soft patch. ... There is no real underlying evidence of any cumulative weakness here."
Since then the Wall Street prophets have contradicted Greenspan. The Aug. 6 Wall Street Journal worried, "The weak job numbers raised the prospect that recent economic weakness is more than just a soft spot as Mr. Greenspan has referred to it, but a sign that something more fundamental is undermining the expansion."
They are all looking at the same tons of economic data. Some call it a momentary blip. Others see the end of a growth period. What and who are the investors to believe?
The truth is that the cumulative evidence is indisputable. Consumer spending, two-thirds of the Gross Domestic Pro duct, is dropping at an alarming rate as wages are not keeping up with the rate of inflation. In addition, interest rate refinancing for home owners is running out of steam as the Fed continues to raise interest rates. And the huge budget deficit is turning into a fiscal drag that has made it impossible to stimulate the economy.
AN ARMY OF UNEMPLOYED IN THE MAKING
According to Louis Uchitelle in the Aug. 2 New York Times, a government report found that "layoffs occurred at the second fastest rate on record during the first three years of the Bush administration. ... That included the permanent dismissal of 11.4 million men and women age 20 or older. That is nearly equal to the 9 percent rate for the 1981-1983 period, which included the steepest contraction since the Great Depression."
President George W. Bush needs an average of almost 200,000 new jobs a month from now to December to avoid being the first president since Herbert Hoover, who held office during the opening years of the Great Depression, to preside over a job decline. Job growth for the first two months is now 55,000 and for the last three months was 106,000.
It is estimated that around 250,000 jobs per month would be required to keep pace with the entry of a working population into the job market. These are young people--high school and college graduates and dropouts who can't afford to go on with their education--who will have no job prospects. They will join the millions of the permanently displaced to constitute an army of the unemployed.
In another report, the Federal Reserve stated that consumer credit outstanding rose $6.6 billion in June, to $2,038 billion. Coupled with this, a Consumer Bank ruptcy Project collected data that pointed out that bankrupties for those in the 45 to 54 age group have increased by 58 percent from a year ago. The report focused on those in the middle income range. Bankruptcies for lower income workers are not included.
THE "LESSER OF TWO EVILS THEORY" IS A NO-WIN STRATEGY
During a presidential campaign, the worlds of politics, economics, and markets become a maelstrom of deception, demagoguery and promises. After the disastrous employment statistics were announced, Bush told a conference of journalists of color: "Economic growth is strong and getting stronger."
Sen. John Kerry seized on the numbers with relish. He commented on those on the other side who say the economy has turned the corner, "Well it must have been a U-turn."
But is Kerry the friend of labor that he purports to be? He is surrounded by a sector of corporate and banking advisors like billionaires Warren Buffett and George Soros, and from the Clinton administration, former Secretary of the Treasury Robert Rubin, who is currently a partner in Goldman Sachs, a premier global investment bank.
Kerry has proposed raising the minimum wage from $5.15 to a measly $7.00 over two years. Such a small raise will only perpetuate poverty. Kerry also missed a crucial vote on extending unemployment benefits. Had he been present, his vote would have passed the extension. He has also disregarded the pension crisis facing millions of retirees and those who are close to retirement.
The Democratic candidate supports NAFTA and "free trade"--an imperialist hatchet job, which costs jobs at home and causes poverty abroad--while hypocritically appealing to employers to limit outsourcing of jobs. He backs the infamous Clinton welfare program that left millions of recipients without an economic safety net. Single mothers, primarily Black, Latina and other women of color, are without child care and living in shelters with no hope for decent housing for their young ones.
On the military front, while death and destruction of the Iraqi population goes on unabated and U.S. soldiers die and are wounded, there is not a dime of difference between the Bush and Kerry camp. That includes support for billions of dollars that end up as profits for Halliburton, Bechtel and fellow travelers.
Kerry has remained silent on the raids by the so-called Department of Homeland Security, the Justice Department, the FBI, on anyone they determine is foreign-born and suspicious, while their immigration services department harasses the undocumented. He has not spoken out against the repressive Patriot Act. He opposes same-sex marriage.
Kerry's chant during the Democratic National Convention that "hope and help are on the way" rings as hollow as the claim of Treasury Secretary John Snow, speaking for President Bush, that "the American economy is continuing on a path of growth and expansion and the president's tax relief continues to give momentum to that upward push."
However, there are signs that hope and help are on the way. The main sign is the Million Worker March movement. The planners, led by a number of African American labor union leaders, have called for an Oct. 17 march on Washington.
The capitalist "lesser of two evils theory" presents a no-win situation to the labor movement and its allies. The workers, the communities, the oppressed nationalities and the anti-war movement are suspicious of the capitalist chorus that shrieks out for faith in the two party system.
Other issue-oriented protest organizations are taking notice of the MWM. This class wide independent movement is getting legs. Build the MWM!
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