Another step toward first U.S. debt crisis in history

San José, CA – Today, Oct. 15, right-wing Republicans in the House of Representatives stopped the House Republican leadership from trying to pass a compromise measure to re-open the federal government and raise its debt ceiling. This marks another step towards the first U.S. debt crisis in history.

San José, CA – Four years after the Great Recession of 2007-2009 officially ended, millions of working people are being left behind by the expansion of the economy. While the stock market and corporate profits reached new highs, there are still millions of fewer jobs than before the recession began, and the official unemployment rate is closer to its recession high than the low before the recession. Things are bad.

On June 1, the Labor Department reported that only 69,000 net new jobs were created in May, less than half of what economists had expected and less than a third of the relatively strong job growth of the December through February period. Immediately the Republicans and the Romney campaign blamed President Obama and his policies, especially the health care reform act. The Democrats and the Obama administration quickly fired back, blaming the Republicans for blocking their economic stimulus proposals in Congress.

On Sept. 30, the Economic Cycle Research Institute (ECRI) publicly stated that the United States economy was tipping into a new recession. This adds to the growing evidence of a serious slowdown in the U.S. economy, including the zero job growth and falling personal income in August as well as falling prices and sales of homes in August.

_Working people need to fight back against austerity _

The U.S. economy continues to stagnate with almost no economic growth or job creation more than three years after the great financial crisis of 2008 and more than two years after the recession officially ended in 2009. The official unemployment rate is still over 9% nationally, and millions of workers who have stopped looking for work are not included in this count. Even worse, the Obama administration projects unemployment to stay above 8% for all of 2012, which would be four years of near double-digit unemployment.

San José, CA – In a sign that the economy is on the edge of another downturn, the Labor Department reported on Sept. 2 that there was no gain in jobs in August. Not counting last summer when there were large layoffs of temporary Census workers, this is the worst jobs report since February of 2010. The Labor Department also revised down the job gains for June and July, so that average job gain over the last three months was only 35,000 net new jobs per month. This is far below the 200,000 or so jobs that a normal recovery would be generating at this stage of an economic expansion.

San José, CA – On August 5, Standard and Poors, commonly known as S&P, downgraded U.S. government bonds from the highest rating AAA to the second-highest AA+. At the same time the S&P called for even more austerity, saying that $4 trillion in cuts in U.S. government spending were needed, not the $2 trillion agreed upon earlier in the week. S&P criticized the U.S. government for not making cuts in Social Security and Medicare. In addition, S&P said that the federal government spending cuts needed to come sooner, increasing the chances of a new downturn in the economy, or the feared ‘double-dip’ recession.

The recession ain’t over yet, fears of a ‘double-dip’ rise

San José, CA – On July 29, the Commerce Department released its report on Gross Domestic Product or GDP for the Second Quarter (April to June) of 2011. GDP, which measures the value of goods and services produced in the United States, rose at only a 1.3% annual rate, much slower than most mainstream economists expected. Even worse, the First Quarter (January to March) economic growth was cut from an earlier estimate of 1.9% to just 0.4%.

Commentary by Masao Suzuki

On June 21, the Chairman of the U.S. Federal Reserve Bank, Ben Bernanke, gave a very downbeat report on the U.S. economy following a two day meeting of the Fed. Bernanke, who is also a professor of economics, admitted that he didn’t have a good explanation for why economic growth in the United States was so weak and the unemployment rate stuck at about 9%. But Marxist political economy does have an explanation: that economic stagnation is a natural outcome of a capitalist economy.

San José, CA – On July 8, the U.S. Department of Labor reported that almost 350,000 unemployed were dropped from federal unemployment insurance rolls. This is the second week in a row that the number of Americans collecting Federal Emergency Unemployment Compensation (EUC) and Extended Benefits (EB) has dropped by more than 300,000. Funding for these programs has run out, and Republicans in the Senate have blocked a vote to provide moneys for federal unemployment insurance benefits. As a result, jobless workers are getting cut off of their federal unemployment insurance benefits by the hundreds of thousands each week.