U.S. Economic Recovery Collapses

Economics / Great Depression II
Sep 02, 2010 - 05:09 AM
By: Barry_Grey

Recent weeks have seen a collapse in US home sales, a weakening of manufacturing activity, an upward trend in jobless benefit claims and, on Friday, a downward revision of second-quarter gross domestic product growth from 2.4 percent to 1.6 percent.

The latter figure is far below the rate of economic expansion needed to bring down unemployment, now at its highest levels since the Great Depression. On the contrary, the sharp slowdown in economic growth heralds a further rise in the jobless rate.

Month after month of mass unemployment, compounded by sweeping cuts in social services at the state and local level and wage cutting in both the private and public sectors, have already produced a social disaster for tens of millions of Americans. One million families are losing their homes to foreclosure every year. Hunger and homelessness are on the rise.

USA Today reported Monday that the recession has resulted in one in six Americans relying on government assistance to survive. Over 50 million people are on Medicaid, the federal-state health insurance program for the poor and disabled. That is an increase of at least 17 percent since the recession began in December 2007.

Over 40 million are receiving food stamps, an increase of nearly 50 percent since the slump began. Close to 10 million are getting unemployment benefits, nearly four times the number in 2007. More than 4.4 million people are on welfare, an 18 percent jump since the recession began.

While the vast majority of workers are struggling to make ends meet or are sinking into poverty, the rich are doing better than ever. Corporate profits are up sharply, driven by downsizing and cost cutting. The stock market has recovered from its lows in the spring of 2009, and executives are continuing to award themselves seven- and eight-digit compensation packages.

Two years after the eruption of the financial crisis, precipitated by the recklessness and criminality of Wall Street, the chasm separating the financial elite and everyone else has grown wider than ever. The New York Times reported Tuesday that the rebound on Wall Street has led to a further polarization between rich and poor in New York City. While the median pay of managerial workers was up 11 percent from three years ago, the median weekly pay of non-managers had fallen 10.4 percent, to $472.

The latter figure is barely above the official poverty line for a family of four of $22,000 a year, an absurdly low plateau that, in New York, means something close to destitution.

The response of the Obama administration and the entire political establishment to the collapse of the so-called “recoveryâ€