Economic Briefs (July 2013)

Tim Taylor wrote on his blog that U.S. firms are holding $1.8 trillion in liquid assets: that is, either cash or marketable securities. What's going on here? Laurie Simon Hodrick tackles the question in a July 2013 policy brief written for the Stanford Institute for Economic Policy Research titled Are U.S. Firms Really Holding Too Much Cash?

Jared Bernstein at the New York Times: Growth From the Middle Out - "At the core of President Obama’s economics speech on Wednesday was the notion that, as rising inequality diverts income growth from the many Americans in the broad middle class, their diminished buying power leads to slower growth. The theory is simple enough and has its roots in basic microeconomics" [as a poor or middle-class person's extra dollars are] "more likely to be spent than saved. The fact that economic growth over this recovery has pretty solidly eluded the poor and middle class is one reason the United States is slogging along at subpar growth rates. In demand-constrained periods like the present, it weakens consumer spending and growth because the small share of beneficiaries of what growth there is have lower consumption propensities than everybody else."

Bud Meyers at the Economic Populist: Obama Didn't Say What Kind of Jobs - "Most of the private sector job [creators] are refusing to hire Americans --- and this is while profits are at roaring highs. Also, the rate of hiring is lower than it was a year ago. And what kind of jobs have been created over the last four years? Michael Grabell of ProPublica, and its editor-in-chief Steve Engelberg, discussed how the temporary work sector has ballooned, accounting for nearly 20 percent of the total job growth since 2009."

Alina Tugend at the New York Times: Unemployed and Older, and Facing a Jobless Future - "For those over 50 and unemployed, the statistics are grim. While unemployment rates for Americans nearing retirement are lower than for young people who are recently out of school, once out of a job, older workers have a much harder time finding work. Over the last year, according to the Labor Department, the average duration of unemployment for older people was 53 weeks, compared with 19 weeks for teenagers. David L. Blustein is a professor of counseling, developmental and educational psychology at the Lynch School of Education at Boston College and works with the older unemployed in suburb of Boston. He says, "They should know that the problem is not with them, but with a system that has treated them like a commodity that can be discarded."

Catherine Rampell at the New York Times: The Multinational Equation on Jobs - "The most recent Bureau of Economic Analysis data available on multinational companies’ employment in the United States is for 2011 [and] data shows that the total number of people working for American affiliates of foreign companies rose 3.3 percent that year, up to 5.6 million workers from 5.4 million in 2010. That rate of increase was higher than that for total American private industry employment that year, which was 1.8 percent."

Can you imagine how good OUR economy would have been if American companies such as Nike and Microsoft (who employee over 2 million people overseas) had built factories in the USA and hired American workers instead? (not mention the corporate taxes our treasury would have had).

From the Wall Street Journal: U.S. Jobless Claims Underscore Uneven Recovery - "The number of American workers seeking new unemployment benefits rose slightly last week, a sign that the labor market's recovery remains fitful."

We can't get Congress to initiate a jobs bill or reform the tax code, and politics is destroying the economy. Charles Blow at the New York Times: Carving Up the Country --- "Our 50 states seem to be united in name only. In fact, we seem to be increasingly becoming two countries under one flag...Liberal Land (coastal, urban and multicultural) and Conservative Country (Southern and Western, rural and racially homogeneous). The other parts of the country are a bit of a mixed bag. This has led to incredible and disturbing concentrations of power. More than two-thirds of the states are now under single-party control, meaning that one party has control of the governor’s office and has majorities in both legislative chambers. This is the highest level of such control since 1952. And Republicans have single-party control in nearly twice as many states as Democrats. The cleaving of this country is becoming an incontrovertible fact, as we drift back toward bifurcation."