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Joint Economic Committee Democrats Chairman - Rep. Don Beyer (D-VA)

Publications

American families are experiencing very difficult economic times – the toughest in terms of stagnant incomes since World War II.  Over the 2000-2008 period, the economic policies pursued during the previous administration left most families behind and ill-prepared to weather the severity of the current recession.  During the Bush administration, the number of Americans living in poverty  increased by nearly 8.2 million; and instead of growing, incomes for families in the bottom 40 percent of the income distribution ladder actually fell. One out of every eight Americans was living below the federal poverty line in 2008. Also, during the eight years of the Bush administration, the ranks of the uninsured grew by 20.6 percent. The cost of health insurance has risen steadily, putting pressure on employers and straining cash-strapped American families.
In the nineteen months between December 2007 and July 2009, the economy shed 6.7 million jobs, the national unemployment rate spiked 4.5 percentage points to 9.4 percent, and the unemployment rate rose in every state and the District of Columbia.  In July, 8 states posted statistically significant over-the-month increases in their jobless rates while 2 states (Minnesota and Vermont) posted statistically significant over-the-month decreases in their jobless rates. Although unemployment rates in the remaining states were essentially unchanged in July, workers across the country continue to experience distressed levels of unemployment. In July, the unemployment rate was 10.0 percent or higher in 15 states and the District of Columbia, and 3 states (Michigan, Rhode Island, and Nevada) had unemployment rates of 12.0 percent or higher.

Working women have received pink slips in growing numbers over the course of the current recession, which began in December 2007.  For the first 3 months of the recession, when job losses were relatively light, women actually gained rather than lost jobs. This uptick in women’s employment is similar to what has happened in previous recessions.  However, in August 2008, this recession began to look quite different from past downturns. Women’s job losses picked up pace to become a significant fraction of the total monthly job losses.

As women’s job losses have accelerated, so have the job losses for working mothers. A Joint Economic Committee analysis of published and unpublished data collected by the Bureau of Labor Statistics (BLS) finds that increases in unemployment during this recession have been especially steep for female heads of household – mothers who are solely responsible for maintaining their families’ economic security.

Democrats inherited one of the worst economic crises in our nation’s history, a crisis that is putting put extraordinary stress on millions of American families struggling to pay their bills and invest in their children’s futures.  The road to recovery will be long, but Congress has worked quickly with the Obama Administration to ease the pressure on working families by advancing an economic policy agenda aimed at restoring broad-based growth, reducing the high costs of health care, improving retirement security, and increasing prosperity for all Americans.

Recent employment reports have underscored how seriously the U.S. economy has been affected by the now year-old recession. Since December of last year, the economy has shed 2.8 million private sector jobs and the national unemployment rate spiked to 7.2 percent. Many states have particularly distressed levels of unemployment: the unemployment rate is at or above 10.0 percent in Rhode Island and Michigan, and greater than or equal to 8.0 percent in South Carolina, California, Nevada, Oregon, North Carolina, Indiana, Georgia, Florida, Mississippi, and the District of Columbia. Since December 2007, the unemployment rate has risen in every state and the District of Columbia and by as much as 4.8 points, in the case of Rhode Island.

 

NEW JEC REPORT:  STEMMING THE CURRENT ECONOMIC DOWNTURN WILL REQUIRE MORE STIMULUS

Consumer-Led Recovery Unlikely Due to Rising Unemployment, High Prices, Dwindling Assets, Historically High Debt

Schumer, Maloney Urge Second Stimulus to Aid Main Street

Washington, D.C. – Senator Charles E. Schumer, Chairman of the Joint Economic Committee (JEC), and Rep. Carolyn B. Maloney, JEC Vice Chair, released a new JEC report entitled “Stemming the Current Economic Downturn Will Require More Stimulus.”  The current economic downturn follows the weakest recovery on record.  Families face rising unemployment, high prices, dwindling assets, historically high debt, and their real income remains lower than it was over eight years ago, all of which makes prospects for a consumer-led recovery highly unlikely.  The weakness of household finances means that absent aggressive government action, the current downturn could be particularly long-lasting and severe.

Sen.  Schumer said, “The American economy very much needs a second stimulus because we not only have to bolster Wall Street, but Main Street.  With unemployment up and jobs down it is very important to prime the pump of the economy.  This report outlines ten clear reasons why Congress must pass a second stimulus.”

Rep. Maloney said, “This report merely documents what American families already know.  During the last 8 years Americans have gone deeper in debt in a losing battle to try and keep their standard of living during the worst economic recovery in history.  For the first time since World War II, real family income has not returned to its pre-recession level, leaving Americans even less able to make ends meet as we enter the second recession of the Presidency of George Bush.  This is the final verdict on a failed economic policy.  The very least we in Washington can do is to provide American families with a real economic stimulus plan that helps main street.”

Families have not yet recovered from the previous recession and now the country faces a severe financial crisis whose effects are spreading throughout the broader economy.  The report details 10 economic indicators that demonstrate the weakness in the household sector:

1. Measured by wage gains and job growth, the 2000s economic recovery was the weakest in generations.
2. The 2000s economic recovery was the first since World War II where the typical family saw net income losses.
3. In the face of income losses, families sustained consumption through borrowing and the ratio of household debt to disposable income soared.
4. Families are now spending a historically high share of their income on debt payments.
5. As home prices fall, family net worth is plunging to its lowest levels in two decades.
6. Families have little or no savings “cushion” to maintain living standards in the face of unemployment or falling real income.
7. Families own a smaller share of their home than at any time since World War II, cutting off the opportunity to use home equity loans as a source of “income”.
8. Women’s earnings will not be able to cushion families as they have in prior recessions, because women’s unemployment is already at recessionary levels.
9. Falling real wages and limited savings have already combined to drag down consumer spending.
10. Investment in residential housing usually boosts consumption after a recession, but given the record-high backlog of homes for sale and the continued credit squeeze, this is not likely to happen soon.

The combination of pre-existing economic weakness and the current problems in the financial sector makes additional fiscal stimulus through government investment and support for families vital to keep the economy moving.  A well-designed fiscal stimulus package will shorten the duration of a downturn and reduce its magnitude, the report concludes.

You can find the report on the JEC website.

The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.
www.jec.senate.gov
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Aug 26 2008

Poverty in America

American families are experiencing very difficult economic times – the toughest in terms of stagnant wages since World War II.  Their incomes are lower in 2007 than at the end of the 1990s and income inequality has risen sharply. Under the Bush administration, the number of Americans living in poverty has increased by nearly 5.7 million; at the same time, incomes for families in the bottom 40 percent of the income distribution have fallen. Today, one out of every eight Americans is living below the federal poverty line.
Since 2000, the ranks of uninsured Americans have grown by 7.2 million.  This represents an 18.8 percent increase in the number of uninsured over the economic cycle between 2000 and 2007.  The number of uninsured fell in 2007 for the first time since President Bush was elected.