Policy Points

03.12.2009 Policy Points Comments Off on September Balance of Trade

September Balance of Trade

The recession continued to affect America’s international trade in September. Once again, the U.S.  imported more goods and services than it exported, according to the most recent report from the Bureau of Economic Analysis. Compared to the revised August data, the September trade deficit was higher, as were the levels of of both imports and exports

image1The graph (left) shows the changes in American imports and exports that have occurred since the start of the recession in December 2007.

The recession has reduced American demand for foreign goods and services and foreign demand for American goods and services (though the fall in the dollar’s value likely is boosting American exports).

Compared to a year ago (seasonally adjusted), U.S. imports were 20.6 percent lower while exports were 13.2 percent lower.

The rapid decline in imports has helped to reduce the trade gap. In September, the  U.S. imported $36.5 billion more than it exportedimage2. When imports of petroleum products are excluded, the trade gaps stood at  a lower $14.8 billion.

Compared to one year ago (seasonally adjusted), the non-petroleum trade deficit is 45 percent lower and the overall trade deficit is 39.4 percent lower.

02.12.2009 Policy Points Comments Off on An Impertinent Question

An Impertinent Question

On the eve of the Obama administration’s Jobs Summit, former Secretary of Labor Robert Reich poses an impertinent question:

But here’s the real worry. The basic assumption that jobs will eventually return when the economy recovers is probably wrong. Some jobs will come back, of course. But the reality that no one wants to talk about is a structural change in the economy that’s been going on for years but which the Great Recession has dramatically accelerated.

Under the pressure of this awful recession, many companies have found ways to cut their payrolls for good. They’ve discovered that new software and computer technologies have made workers in Asia and Latin America just about as productive as Americans, and that the Internet allows far more work to be efficiently outsourced abroad.

This means many Americans won’t be rehired unless they’re willing to settle for much lower wages and benefits. Today’s official unemployment numbers hide the extent to which Americans are already on this path. Among those with jobs, a large and growing number have had to accept lower pay as a condition for keeping them. Or they’ve lost higher-paying jobs and are now in a new ones that pays less.

Yet reducing unemployment by cutting wages merely exchanges one problem for another. We’ll get jobs back but have more people working for pay they consider inadequate, more working families at or near poverty, and widening inequality. The nation will also have a harder time restarting the economy because so many more Americans lack the money they need to buy all the goods and services the economy can produce.

So let’s be clear: The goal isn’t just more jobs. It’s more jobs with good wages. Which means the fix isn’t just temporary measures to accelerate a jobs recovery, but permanent new investments in the productivity of Americans.

02.12.2009 Policy Points Comments Off on NC’s Labor Market: Oct. Conditions

NC’s Labor Market: Oct. Conditions

December marks the second anniversary of the start of the current recession. Twenty four months after the recession’s onset, how is North Carolina’s labor market performing?

image 1As of October (the most recent month of data), the recession had led North Carolina’s non-farm employers to eliminate, on net , 238,100 payroll positions. Consequently, payroll employment is now 5.7 percent smaller than it was in December 2007 (graph, left).

In terms of job losses, the current recession was a slow starter. Significant net losses did not start until fall 2009, with heavy losses occurring every month between 11/08 and 3/09. In fact, that period accounts for 64 percent of all the job losses that have occurred during the recession. Although the pace of job losses has moderated since April, the overall trend remains a downward one.

image 2Job losses have been relatively widespread (graph, right). With the exception of the health care/education and government fields, payrolls have contracted in every major industry. The greatest numerical losses have occurred in manufacturing, construction, and professional services while the greatest proportional declines have occurred in construction and manufacturing.

Job loss has led to a rapid increase in unemployment. Since the start of the recession, the state unemployment rate has more than doubled, rising to 11 percent from 4.7 percent. The unemployment rate now is at a level last seen during the recession of the early 1980s (graph, below). Due to limitations in the ways in which unemployment is calculated, the number of individuals who are effectively jobless likely is higher. Consider: North Carolina’s labor force now is smaller than it was at the start of the recession. Similarly, the share of the prime-age population engaged in economically productive activities has fallen.

image 3In geographic terms, unemployment has been widespread. As of October, 64 counties had double-digit unemployment rates, and 30 had rates of at least 12 percent. Even major metro areas like the Research Triangle have struggled (unemployment rate of 8.4 percent)

Little in the state employment data suggest that a recovery is imminent. Economic demand remains weak at the state and national levels despite the important boost provided by the federal recovery package. Even when demand does return — a date that may be a few years away, firms will have many alternatives to hiring permanent employees.

Based on current trends, North Carolina’s labor market likely will remain weak into the foreseeable future. For individuals, a weak market will result in family economic hardships, while firms will struggle to secure business.  Meanwhile, the state will grapple with the resulting budget shortfalls.

02.12.2009 Policy Points Comments Off on Recessionary Conditions Widespread in Oct.

Recessionary Conditions Widespread in Oct.

Economic conditions remained weak across much of the nation in October, according to the newest State Coincident Indexes Report prepared by the Federal Reserve Bank of Philadelphia.

In October coincident indexes moved in a negative direction in 27 states and in a positive direction in 15 states (KS, MA, MI, MN, MT, NC, NH, NJ, OH, OR, RI, TN, VA, VT, WV). No changes occurred in eight states (AR, CO, FL, IA, IN, ME, MO, NV).

imageThe map to the right, which is taken from the Reserve Bank’ survey, shows the three-month changes in coincident indicators by state. Positive numbers denote improvements in economic conditions, and negative numbers refer to declines.

Over the last three months, coincident  indexes decreased in 37 states, rose in seven states (IN, MA, MN, MT, NC, NH, OH, SD, TN, VA, VT, WV) and held steady in one state: Idaho.

During the same period, North Carolina’s coincident index moved in a slightly positive direction, suggesting that economic conditions improved slightly.

01.12.2009 Policy Points Comments Off on Around the Dial – Dec. 1

Around the Dial – Dec. 1

Economic policy reports, blog postings, and media stories of interest: