Sign of our times? Even by Las Vegas standards, it is a shocking billboard: A mannequin dangling on a hangman’s noose below a black sign with the ominous words “Dying for Work. Hope you’re Happy Wall Street.” A publicity stunt, obviously, in bad taste.
Without further action from the Fed, We will lose our grip on both — growth and 8% unemployment. Unemployment would go back to 9%. Real GDP would fall by about 3% in the first half of 2013. A double-dip recession would be very real. The only good news is that housing prices are edging slightly higher.
Since the crisis of 2008, most Americans have come to expect gloom rather than a bright future. The long-term US growth rate is burdened by our huge debt and our slowing to 2.5 percent from 3.4 percent from 1950 and 2007. Polls show that a majority of Americans think China is the world’s leading economy, though it is less than one third that of the US. The US growth rate of 2.5 percent remains the fastest growing rich economy and is gaining on China.
This is America’s recovery. If evidence were to emerge that the economy were experiencing a major productivity boost, sufficient to allow faster job growth without a corresponding rise in inflation, then America would get qualitatively better job growth. Otherwise, it makes sense to expect more of the same: disappointing growth and the slow decline of the ranks of the unemployed as jobless workers give up and leave the labor force. Stand back and look at employment growth and the stability of the rise in payrolls through recovery is simply unmistakable. That strikingly flat line is down to the Fed’s engineering.
The Bank of England cut its growth forecast to close to zero, as the double-dip recession intensifies.The quarterly inflation report indicated no growth for 2012, compared with 2% predicted a year ago. S&P downgraded 15 of Itlaly’s biggest banks and cut the ratings on 15 more. The credit ratings agency says that Italy’s recession will be potentially deeper and more prolonged than previously thought- problem assets are mounting. Meanwhile it appears that Spain will be next to apply for a bail out. Spain’s regional governments are scrambling to the trough. Greece’s task is daunting. Greece is still searching for a way out of its labyrinth.
The economic downturn and austerity plans in the Eurozone also helps explain the rise of the anti-immigrant sentiment in Greece, Holland, Hungary, Finland and other EU countries. There are concerns of national culture, identity and way of life. France has seen resentment against immigrants make headlines in several regions. With the lack of ideas of how to deal with the economic malaise, Hungary’s Jobbik, Norway’s Progress Party, the True Fins in Finland and the Danish People’s Party are all contenders for entering government. As memories of World War II fade, Europe’s far-right parties have adopted the welfare aspirations of the center-left and with protectionism and nationalism. A rather unhealthy stew.