The U.S. Economy’s Stagnation Problem
Posted on Jun 1, 2011
The economic indicators for May aren’t pretty, throwing up red flags that American job growth and factory output aren’t enough to carry the U.S. economy to recovery and forcing a critical look at the way the crisis has been managed. Although the economy was expected to add 175,000 jobs in May, private employers added only 38,000. At the same time, manufacturing output grew in May at the slowest pace since September 2009. Scholars and critics have noted the redistribution of American wealth toward the upper class, and the latest numbers demonstrate the compound problems faced by the shrinking middle class. High unemployment, low real estate values and maxed-out debt levels are choking millions of Americans even though corporate profits and stock prices have mostly recovered. The open secret is that big business has staked the bulk of its future growth on emerging economies, leaving struggling U.S. “consumers” to fend for themselves. —KDG
The job market’s already slow recovery looks to be losing momentum, and so is the manufacturing industry.
Private employers added just 38,000 jobs in May, down from 177,000 in April, according to payroll processor ADP. It’s the weakest result since September. The report may offer a preview of Friday’s more comprehensive job report from the Labor Department, which includes hiring by both private employers and the government.
“As far as we can tell, employers have hugely over-reacted to the surge in oil prices, which has slowed but not killed consumption,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics.
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