September retail sales rose: total up 0.6 percent, ex-auto up 0.5 percent, ex-auto ex-gas up 0.3 percent, which indicates a good holiday season for retail. But this is bucking the downward trend that has sales sinking to the 3 percent range since 2014—not what is needed for a continuing recovery. This is even though the jobs market is looking good, with job openings still at almost record levels and the unemployment rate at 5 percent.
Auto sales are the highlight of the September retail report, up 1.1 percent to reverse the prior month’s 0.3 percent decline. Auto sales, a discretionary category, have been solid this year though down from last year’s peak. Restaurants, another discretionary category, are also strong, up 0.8 percent to add to August’s 0.7 percent gain.
Job openings fell to 7.3 percent in August to 5.443 million at the same time that hiring, instead of rising, slowed by 0.9 percent to 5.210 million. And though the openings number is the lowest since last December, the hiring number is more respectable, ranking as the fourth highest so far this year.
We still have a problem with male blue collar workers, however. Some 7 million, or 11.4 percent of men between 25 and 54 years of age, have stopped looking for work, according to Princeton Economist Alan Krueger. The causes are many, including physical disabilities, but also because of lack of skills required in this fast changing economy. Most have no college or post-high school technical education, according to Dr. Krueger. And 40 percent take some kind of opioids, most painkillers.
This is the hard core of the unemployed that need government assistance the most—such as universal healthcare (that includes being able to negotiate for drug costs), and government-funded infrastructure jobs that would encourage them to return to the jobs market.
And those most affected are in the poorest red states that have rejected Obamacare, in particular, which tends to hurt the unemployed most , thus stoking their anger. It is times like these that require a fully-funded and functional social safety net, in other words.
So it really is the huge loss in both residential and public investment construction that has most hurt this recovery, and resulted in the huge backlog of deferred bridge, highway, and energy infrastructure improvements. Residential construction of new homes is roughly two-thirds of what it was in 2005, for instance.
Whereas the private sector has gained some 11 million jobs, governments haven’t yet hired back all those that lost their jobs due to the Great Recession Which in many ways was greater than the Great Depression. I.e.,, more wealth was lost with less GDP growth since 2008 than in the Nineteen-Thirties because we did not have a new New Deal that could employ millions in the public sector when the private sector economy collapsed.
This happens when tax revenues plunge, and state governments in particular have to balance their budgets. There has to be a massive reinvestment in our future growth, in other words, for this economy to really recover and put those 7 million still disenfranchised back to work.
Harlan Green © 2016
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