Private payrolls in the US took a significant hit in September, adding complexity to an already uncertain economic landscape. With the government shutdown halting the release of the Bureau of Labor Statistics’ (BLS) monthly jobs report, policymakers and investors are left grappling for insights into the labor market’s health. In the absence of official data, attention has turned to alternative sources, such as the private-sector jobs report from payroll processor ADP, released on October 1.
According to ADP, US private-sector businesses shed 32,000 jobs in September, a stark contrast to economists’ expectations of a 50,000-job gain. The report also revised August’s figures, turning an initial estimate of 54,000 jobs added into a loss of 3,000. ADP’s chief economist, Nela Richardson, attributed much of this downturn to a preliminary “rebenchmarking” of the data, which reduced September’s job count by 43,000 compared to pre-benchmarked figures. “While the numbers changed, the story remains consistent: hiring momentum has slowed throughout 2024,” Richardson told reporters. She noted that the recalibration, aligned with the 2024 Quarterly Census of Employment and Wages (QCEW), revealed a persistent slowdown in hiring, particularly evident in September. The QCEW, which draws from quarterly tax reports submitted by businesses, offers a comprehensive view of employment and wages at state, regional, and county levels. However, its lagged data limits its timeliness, leaving gaps in real-time analysis.
September’s job losses were driven primarily by small businesses, with widespread declines across industries. Professional and business services, as well as leisure and hospitality, saw some of the largest drops. Health care remained a notable exception, continuing to drive consistent employment growth throughout the year. The broader labor market is showing signs of stagnation. The BLS’s August jobs report, the last available before the shutdown, indicated that the economy added just 22,000 jobs, with the unemployment rate climbing to 4.3%—its highest in nearly four years. June’s job gains were also revised downward into negative territory. The BLS’s Job Openings and Labor Turnover Survey, released earlier this week, further underscored the slowdown, with the hiring rate dropping to 3.2% in August, matching its lowest level since 2013, excluding the early pandemic period in 2020.
Despite the lack of a monthly BLS jobs report, economists argue that the Federal Reserve has enough evidence to justify further interest rate cuts at its next meeting. Joe Brusuelas, an economist at RSM US, noted that the labor market’s condition supports a quarter-point rate reduction. He highlighted additional pressures, including policy uncertainty around trade and immigration, as well as long-term demographic challenges limiting labor supply. “The government shutdown and threats of mass firings are not conducive to a positive October payroll outlook,” Brusuelas wrote. US stocks reflected this uncertainty, trending lower amid concerns over the shutdown and remaining subdued after the ADP report’s release.
As the government shutdown persists, the absence of comprehensive data will continue to challenge policymakers and investors alike, making reports like ADP’s a critical, if imperfect, tool for navigating the economic landscape.
The US Economy added 263,000 jobs in November, defying aggressive action from the Federal Reserve to cool the economy and bring down decades-high inflation. The unemployment rateheld steady at 3.7%, according to the Labor Department, which released the latest monthly jobs snapshot on December 2. Economists surveyed by Refinitiv had expected the pace of hiring to slow to a gain of only 200,000 jobs in November and the unemployment rate to stay flat at 3.7%. Some of the largest monthly job gains were in the leisure and hospitality sector, as well as health care. The hot jobs report also showed an unexpected spike in average hourly earnings, another knock against the Fed’s efforts to rein in inflation by cooling demand. Officials at the central bank have expressed concern about rising wages keeping inflation elevated.
In November, average hourly earnings increased 0.6% from the month before and 5.1% year over year. Economists were expecting those rates of increases to slow from October, where they increased by a revised 0.5% month-over-month and 4.9% year-over-year. “The November employment report delivers a holiday season package of good news for American workers, including a strong increase in wages,” said Mark Hamrick, Bankrate senior economist, in a statement. “In keeping with the classic divide sometimes seen between Main Street and Wall Street, the report tells the Federal Reserve it has more work to do in its battle against inflation.”
The picture of the labor market is becoming more mixed, reflecting a number of forces at play, said Sophia Koropeckyj, managing director at Moody’s Analytics. “First, the tight labor market has definitely limited holiday hiring, but employers are also hiring more cautiously given the uncertainty about the strength of consumer spending,” she wrote in a note Friday. “In addition, employers may be more cautious in order to support margins amid rising labor and material costs. Some interest-rate sensitive industries have also been pulling back. It should be noted that pulling back does not necessarily mean laying off workers. It can mean more cautious hiring. This explains in part the low number layoffs and low unemployment rate.”
The November jobs report report also contained significant revisions: September was revised down by 46,000 to 269,000 jobs, and October was revised up by 23,000 jobs to 284,000. Considering those updates, November’s monthly gain, which remains considerably above pre-pandemic monthly averages, is now the lowest total jobs added since April 2021. Still, that might not bring much solace to the Fed, which has raised its benchmark lending rate by 3.75 percentage points this year in hopes of cooling off demand and bringing down white-hot inflation. While some areas of the economy show the effects of the Fed’s actions, home sales have fallen and inflation rates are starting to slow, the labor market has remained robust in its efforts to continue to recover jobs lost during the pandemic and adjust to continued strong consumer spending, especially in services.
The November employment report marks the very last jobs report before the Fed’s next meeting on December 13-14, when officials are expected to raise rates by half a percentage point, slightly lower than in the four previous meetings. And the hot jobs report is unlikely to shift the Fed away from thatintention to moderate its pace of increases, said Angelo Kourkafas, investment strategist at Edward Jones. “But what it does is it potentially dashes some of the hopes that the Fed will be cutting rates any time soon,” he told CNN Business. “We’re not there yet.”
The strong US labor market is showing signs of cooling, with the Labor Department reporting on November 4 a slower pace of Job Growth and higher unemployment. While the closely watched October jobs report was strong by historical standards, it suggests a series of rate hikes by the Federal Reserve meant to cool the economy has, as yet, had only a limited impact on employers’ desire to hire more workers. The report shows employers added 261,000 jobs in October and the unemployment rate rose to 3.7% from 3.5% in September, a lower monthly jobs gain than the revised September number of 315,000, though it is above the 200,000 forecast from economists surveyed by Refinitiv.
October marks the smallest monthly jobs gain for the US economy since December 2020. But it is also a solid gain by historical standards. The economy added an average of 183,000 jobs a month over the course of the decade before the pandemic. “Today’s stronger than expected report illustrates the difficult task that still lies ahead for the Fed wrestling a resilient labor market and sticky inflation,” said Mike Loewengart, head of model portfolio construction for Morgan Stanley Global Investment Office. “While the number may be disappointing for investors hoping for a dovish Fed sooner rather than later, keep in mind it was the lowest reading in nearly two years.”
Economists had expected a smaller rise in the unemployment rate, to only 3.6%. The unemployment rate is calculated using a separate survey of households rather than the employer survey used to count workers on the job. The higher-than-expected unemployment rate is also still low by historical standards, as September’s 3.5% reading matched a half-century low.
Federal Reserve Chairman Jerome Powell has warned that the economy may need to shed jobs as part of the central bank’s battle to tamp down the pace of economic growth as a way of combating higher prices.The continued strength in the labor market could leave the door open for the Fed to continue to hike rates at its upcoming meetings. Several economists said they think the Federal Reserve could slow the pace of rate hikes to a half-percentage point, rather than the three-quarters of a point increases it has been approving at recent meetings. “The bottom line here is that the labor market is softening, but has not yet reached the point where the data are screaming at the Fed to stop tightening,” said Ian Shepherdson, chief economist for Pantheon Macroeconomics. “But if these trends continue, as we expect, markets will start to push the Fed, and especially Chair Powell, to rethink the idea of continued hikes next year.”
The jobs report was praised as good news by Labor Secretary Marty Walsh. “Obviously, 261,000 jobs is great,” he told CNN in an interview after the jobs report was released. However, he noted that while total employment is now above where it was before the pandemic, there are still some sectors, such as leisure and hospitality and public schools, where employment is not yet back to pre-pandemic levels. But he acknowledged that even with the strong labor market, high prices, not jobs, are on the minds of most Americans. “No matter how many jobs that I can get in front of this camera and tell you how we’ve added and how great they are, people are still feeling the struggle at the kitchen table,” he said. The Biden administration is working to address rising prices with its Inflation Reduction Act, he added.
In addition to employment totals, one other key metric the Fed focuses on is wage growth, since higher wages can create inflationary pressure by putting more money in the hands of consumers and driving up demand for goods and services. The October jobs report showed a slowdown in wage gains, with the average weekly wage paid by businesses up just 3.8% from the 4.1% annual gain in September, and well off the gains of 5% or more seen earlier this year and during many months of 2021. Even when wage growth was at 5%, that did not keep up with the pace of price increases being paid by consumers, which stood at an average of 8.2% in the most recent Consumer Price Index. The slower pace of wage increases in this report indicates that it will be even harder for American consumers to pay higher prices.
Job growth rose far more than expected in January despite surging Omicron cases that seemingly sent millions of workers to the sidelines, the Labor Department reported February 4. Nonfarm payrolls surged by 467,000 for the month, while the unemployment rate edged higher to 4%, according to the Bureau of Labor Statistics. The Dow Jones estimate was for payroll growth of 150,000 and a 3.9% unemployment rate. The stunning gain came a week after the Biden Administration warned that the numbers could be low due to the pandemic. COVID cases, however, have plunged nationally in recent weeks, with the seven-day moving average down more than 50% since peaking in mid-January, according to the CDC. Most economists had expected January’s number to be tepid due to the virus, though they were looking for stronger gains ahead.
Along with the big upside surprise for January, massive revisions sent previous months considerably higher. December, which initially was reported as a gain of 199,000, went up to 510,000. November surged to 647,000 from the previously reported 249,000. For the two months alone, the initial counts were revised up by 709,000. The revisions came as part of the annual adjustments from the BLS that saw sizeable changes for many of the months in 2021. Those changes brought the 2021 total to 6.665 million, the biggest single-year gain in US history since 1983. “The benchmark revisions helped the numbers a bit just because it moved out some of the seasonal factors that have been at work. But overall the job market is strong, particularly in the face of omicron,” said Kathy Jones, chief fixed-income strategist at Charles Schwab. “It’s hard to find a weak spot in this report.”
For January, the biggest employment gains came in leisure and hospitality, which saw 151,000 hires, 108,000 of which came from bars and restaurants. Professional and business services contributed 86,000, while retail was up 61,000. Earnings also rose sharply, accelerating 0.7%, good for a 12-month gain of 5.7% and providing confirmation that inflation continues to gather strength. That yearly move was the biggest gain since May 2020 when wage numbers were distorted by the pandemic. The rate of wage gains, however, still lags inflation, which was running around 7% in December as gauged by the consumer price index. The labor force participation rate rose to 62.2%, a 0.3 percentage point gain, taking the rate, which is closely watched by Fed officials, to its highest level since March 2020 and within 1.2 percentage points of where it was pre-pandemic. The labor force participation rate for women rose to 57%.
“These data make it clear that the labor market ahead of Omicron was much stronger than previously believed, and it’s very tempting to argue that the [January] data mean that all danger of an Omicron hit has passed,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. ” We’re a bit more cautious than that, not least because the near-real-time data fell through most of [January] and have only just begun to recover.” The job gains brought employment back to about 1.7 million below where it was in February 2020, a month before the pandemic declaration.
The US economy grew 5.7 percent last year, the biggest increase since 1984, according to a January 27 Commerce Department report. That said, however, the growth “wasn’t a straight line,” notes Mark Zandi, chief economist at Moody’s Analytics. “The economy remains tethered to the pandemic.” For example, though gross domestic product expanded at a whopping 6.9 percent annual rate in the final three months of 2021, it “recently lost momentum” explains The Wall Street Journal, “with business activity undermined by pandemic-induced shortages of supplies and workers.” Still, as a whole, “2021 marked the strongest economic rebound in decades.”
American Businesses initially boomed during the vaccine rollout last spring and early summer, as protected Americans began to once again travel and dine out. That surge slowed, however, once the Delta variant arrived, notes NPR, and Omicron reared its ugly head not too long after. “Q4 started with a bang and ended with a whimper,” Zandi told NPR. “October was a fantastic month for the economy — consumer spending, investment — everything was kind of firing on all cylinders. And then by December, Omicron came on the scene quickly and did a lot of damage.” Even with its strength, last year’s economic growth fell short of economists’ hopes, proving COVID has still held the recovery back, note NPR and the Journal. “There were just too many people who didn’t get vaccinated,” Zandi added. “It’s admirable how well the economy did perform, despite the fact that vaccines didn’t exactly solve the problem.”
Positively, however, though consumer spending slowed in the first half of January, it did not decline drastically, suggesting Americans “aren’t too spooked and should keep output growing.” To that end, even with Omicron’s drag, economists believe “activity should normalize as the variant fades and spring approaches,”
The US Inflation rate hit its fastest pace in nearly four decades last year as pandemic-related supply and demand imbalances, along with stimulus intended to shore up the economy, pushed prices up at a 7% annual rate. The Labor Department said on January 12 that the consumer-price index, which measures what consumers pay for goods and services, rose 7% in December from the same month a year earlier, up from 6.8% in November. That was the fastest since 1982 and marked the third straight month in which inflation exceeded 6%. The so-called core price index, which excludes the often-volatile categories of food and energy, climbed 5.5% in December from a year earlier. That was a bigger increase than November’s 4.9% rise, and the highest rate since 1991. On a monthly basis, the CPI increased a seasonally adjusted 0.5% in December from the preceding month, decelerating from October and November.
The last time consumer prices clocked in at such an annual increase was in June 1982, but the circumstances were very different from today. While inflation right now is rising, back then it was falling after peaking at 14.8% in 1980, when Jimmy Carter was still president and the Iranian revolution had pushed up oil prices. By then, newly installed Federal Reserve Chairman Paul Volcker had set out to crush inflation by raising interest rates dramatically, causing a brief recession in 1980. As rates reached 19% in 1981, a much deeper recession began that lasted into 1982. By the summer of 1982, both inflation and interest rates were falling sharply.
Today, the Coronavirus pandemic has caused supply-chain disruptions, and a shortage of goods and materials, particularly autos, coupled with strong demand from consumers flush with the benefits of government stimulus are behind the inflation surge. Prices for autos, furniture, and other durable goods continue to drive much of the inflationary surge, fueled by largely pandemic-related imbalances of supply and demand that most economists expect to fade as COVID’s impact on economic activity eases. Prices of used cars and trucks soared 37.3% in December from a year earlier, while living room, kitchen and dining room furniture jumped 17.3%.
Economists and the Federal Reserve expect inflation to ease this year as supply bottlenecks clear and demand normalizes, but the Omicron variant has renewed uncertainty about the economic outlook as the pandemic continues. Constance Hunter, chief economist at KPMG, expects the booming demand for goods to reverse in the first half of 2022, easing overall price pressure. “I do think we’ll get back to some semblance of normal as people run through their savings and, hopefully, as we move past Omicron,” she said. Fed Chairman Jerome Powell in congressional testimony said he was optimistic supply-chain issues would ease this year and help bring inflation down. However, he also noted that the smaller U.S. labor force “can be an issue going forward for inflation, probably more so than these supply-chain issues,” Powell said.
The December inflation data suggest a mixed initial impact of the Omicron variant, which is posing a new threat to the economy as the pandemic enters its third year. Prices for airline fares and, in particular, hotels accelerated in December, though those for recreation services fell. Prices for in-person services generally slumped during previous surges in COVID infections. Gains in energy prices—which had been driven by pandemic-related disruptions as well as by weather and geopolitical factors—showed signs of flagging, with gasoline prices falling 0.5% in December from November. However, food inflation remains elevated, rising 0.5% in December from November, a slightly slower pace than the prior month.
The US economy created far fewer jobs than expected in November, in a sign that hiring started to slow even ahead of the new coronavirus Omicron variant threat, the Labor Department reported on December 3. Nonfarm payrolls increased by just 210,000 for the month, though the unemployment rate fell sharply to 4.2% from 4.6%, even though the labor force participation rate increased for the month to 61.8%, its highest level since March 2020. The Dow Jones estimate was for 573,000 new jobs and a jobless level of 4.5% for an economy beset by a chronic labor shortage. A more encompassing measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons dropped even more, tumbling to 7.8% from 8.3%. The household survey painted a brighter picture, with an addition of 1.1 million jobs as the labor force increased by 594,000.
“This report is a tale of two surveys,” said Nick Bunker, economic research director at jobs placement site Indeed. “The household survey shows accelerating employment gains, workers returning to the labor force, and low levels of involuntary part-time work. The payroll survey shows a significant deceleration in job growth, particularly in COVID-affected sectors.” “The underlying momentum of the labor market is still strong, but this month shows more uncertainty than expected,” he added. Leisure and hospitality, which includes bars, restaurants, hotels, and similar businesses, saw a gain of just 23,000 after being a leading job creator for much of the recovery. Though the sector has regained nearly 7 million of the jobs lost at the depths of the pandemic, it remains about 1.3 million below its February 2020 level, with an unemployment rate stuck at 7.5%.
Following the disappointment, markets initially shrugged off the numbers but then turned negative after the open. Initial jobs tallies this year have seen substantial revisions, with months showing low counts initially often bumped higher. The October and September estimates were moved up a combined 82,000 in the report. Sectors showing the biggest gains in November included professional and business services (90,000), transportation and warehousing (50,000), and construction (31,000). Even with the holiday shopping season approaching, retail saw a decline of 20,000. The government lost 25,000 jobs. Worker wages climbed for the month, rising 0.26% in November and 4.8% from a year ago. Both numbers were slightly below estimates.
Policymakers have been watching the employment figures closely to gauge how close the economy is to a full recovery from the depths of the pandemic. The US suffered its shortest but steepest recession in the early days of the coronavirus pandemic in March and April of 2020 and has been on a progressive but volatile path since. Federal Reserve officials put a new wrinkle into the picture this week when they indicated that the measures they instituted to support growth could be coming to an end sooner than expected. In congressional testimony earlier in the week, Fed Chairman Jerome Powell said he expects the central bank’s policy committee to discuss at its meeting this month stepping up the level at which it is tapering its monthly bond purchases. Powell said he sees the unwinding to conclude “a few months” sooner than expected, a move that would open the possibility for interest rate hikes.
“The disappointing 210,000 gain in non-farm payrolls in November suggests the labor market recovery was faltering even before the potential impact of the new Omicron variant, possibly as a result of the rising infection rates in the Northeast and Midwest,” wrote Andrew Hunter, senior US economist at Capital Economics. “Nevertheless, the Fed will still push ahead with its plans to accelerate the pace of its QE taper at this month’s FOMC meeting.” St. Louis Fed President James Bullard commented on the jobs numbers upon their release, saying the economy as measured by GDP has recovered fully and can operate with less policy stimulus, particularly considering the pace at which inflation is running. “These considerations suggest, on balance, that the Federal Open Market Committee should remove monetary policy accommodation,” Bullard said.
President Joe Biden said on November 23 that the administration will tap the Strategic Petroleum Reserve as part of a global effort by energy-consuming nations to calm 2021′s rapid rise in fuel prices. The coordinated release between the US, India, China, Japan, Republic of Korea, and the United Kingdom is the first such move of its kind. The US will release 50 million barrels from the SPR. Of that total, 32 million barrels will be exchanged over the next several months, while 18 million barrels will be an acceleration of a previously authorized sale. US oil dipped 1.9% to a session low of $75.30 per barrel following the announcement, before recovering those losses and moving into positive territory. The contract last traded 2.5% higher at $78.67 per barrel. International benchmark Brent crude stood at $82.31 per barrel, for a gain of 3.2%.
The announcement follows the Biden Administration saying for months that it was looking into the tools at its disposal as West Texas Intermediate crude futures surged to a seven-year high, above $85. Prices at the pump have followed the ascent and are hovering around their highest level in seven years. The national average for a gallon of gas stood at $3.409 on Monday, according to AAA, up from $2.11 one year ago. Crude prices make up between 50% and 60% of what consumers pay to fill up their tanks, AAA said. “The President stands ready to take additional action, if needed, and is prepared to use his full authorities working in coordination with the rest of the world to maintain adequate supply as we exit the pandemic,” the White House said in a statement.
As of November 19, the SPR held 604.5 million barrels spread across four sites, according to the Department of Energy. It takes 13 days after a presidential announcement for the oil to hit the market, the department said. In total, the SPR, which was founded in 1975 after the oil embargo, can hold 727 million barrels. The SPR can be tapped in three ways: a full drawdown to counter a “severe energy interruption,” a limited drawdown of up to 30 million barrels, or a drawdown for an exchange or test sale, according to the DOE. “This is a well-timed move to try and lower oil prices,” John Kilduff, partner at Again Capital, said after the announcement. “This added supply should help to bridge the production shortfall ahead of winter, especially if we get confirmation of meaningful supply, as well, from several of the major Asian consuming nations.”
In August, the Biden administration called on OPEC and its oil-producing allies to boost output in the face of rising energy prices. But the group decided to maintain its previously agreed-upon schedule of raising production by 400,000 barrels per month. In April 2020, the group made the unprecedented decision to remove nearly 10 million barrels per day from the market as the pandemic sapped demand for petroleum products. Other producers, including the US, also curbed production as oil prices plunged to never-before-seen lows. Since then, demand has rebounded while producers have been slow to return oil to the market, which has pushed crude to multiyear highs. “Today marks an official emergence of an ‘anti-OPEC+’, a group of top oil-consuming countries that are taking the supply-side dynamics into their own hands in the unconventional and unprecedented release of strategic petroleum reserves to create artificial looseness in the oil market and deliver a negative blow to oil prices,” said Louise Dickson, senior oil markets analyst at Rystad Energy.
The US Economy and job market snapped back in October, with nonfarm payrolls rising more than expected while the unemployment rate fell to 4.6%, the Labor Department reported on November 5. Nonfarm payrolls increased by 531,000 for the month, compared with the Dow Jones estimate of 450,000. The jobless rate had been expected to edge down to 4.7%. Private payrolls were even stronger, rising 604,000 as a loss of 73,000 government jobs pulled down the headline number. October’s gains represented a sharp pickup from September, which gained 312,000 jobs after the initial Bureau of Labor Statistics estimate of 194,000 saw a substantial upward revision in the report.
The numbers helped allay concerns that rising inflation, a severe labor shortage, and slowing economic growth would tamp down jobs creation. “This is the kind of recovery we can get when we are not sidelined by a surge in Covid cases,” said Nick Bunker, economic research director at job placement site Indeed. “If this is the sort of job growth we will see in the next several months, we are on a solid path.” Markets rallied strongly on the news, with the Dow up nearly 350 points in early trading and government bond yields mostly lower.
The critical leisure and hospitality sector led the way, adding 164,000 as Americans ventured out to eating and drinking establishments and went on vacations again as COVID numbers fell during the month. For 2021, the sector has reclaimed 2.4 million positions lost during the pandemic. Other sectors posting solid gains included professional and business services (100,000), manufacturing (60,000), and transportation and warehousing (54,000). Construction added 44,000 positions while health care was up 37,000 and retail added 35,000. Wages increased 0.4% for the month, in line with estimates, but rose 4.9% on a year-over-year basis, reflecting the inflationary pressures that have intensified through the year. The average workweek edged lower by one-tenth of an hour to 34.7 hours.
The unemployment rate drop came with the labor force participation rate holding steady at 61.6%, still 1.7 percentage points below its February 2020 level before the pandemic declaration. That represents just shy of 3 million fewer Americans considered part of the workforce and is reflective of ongoing concerns about staffing levels. “While the strength of employment was an encouraging sign that labor demand remains strong, labor supply remains very weak. The labor force rose by a muted 104,000, which is not even enough to even keep pace with population growth,” said Michael Pearce, senior US economist at Capital Economics. However, one metric that the Federal Reserve watches closely, the participation rate among so-called prime-age workers 25 to 54, ticked higher to 81.7%.
Treasury Secretary Janet Yellen weighed in on the report with a Twitter thread in which she said the administration’s aggressive fiscal policies that have pumped in more than $5 trillion to the economy helped stave off more dire consequences from the pandemic. “Bold fiscal policy works,” Yellen wrote. “A rebound like this was never a foregone conclusion. When our administration took office back in January, there was a real risk that our economy was going to slip into a prolonged recession. Now our recovery is outpacing other wealthy nations’.”
The report comes amid heightened concerns about the state of the labor market, particularly a chronic shortage that has left companies unable to fill positions to scale back production and cut hours of operation. Companies have been increasing wages and adding other incentives as the working share of the potential labor force operates well below its pre-pandemic level. Since adding more than a million jobs in July, the labor market had slowed sharply through the rest of the summer, with sizeable letdowns in August and September as economists greatly overestimated growth in both months. However, revisions showed that the numbers for those months were not quite as dismal. Along with the boost from September’s initial count, August’s final reading came up another 117,000 to 483,000.
The House vote followed a day of wrangling over how to enact the two planks of the party’s agenda. The push-and-pull exemplified party leaders’ months-long struggle to get progressives and centrists, who have differing visions of the government’s role in the economy, behind the same bills. Democrats entered the day planning to pass both the infrastructure legislation and the party’s larger $1.75 trillion social safety net and climate package. A demand from a handful of centrists to see a Congressional Budget Office estimate of the social spending plan’s budgetary effects delayed its approval. Progressives sought assurances the holdouts would support the bigger proposal if they voted for the infrastructure bill. After hours of talks, and a call by President joe Biden into a progressive caucus meeting urging lawmakers to back the infrastructure bill, the party’s liberal wing got assurances from centrists that they would support the larger package.
Congressional Progressive Caucus Chair Congresswoman Pramila Jayapal (D-WA) said the group reached a deal to back the infrastructure plan in exchange for a commitment to take up the safety-net bill “no later than the week of November 15.” A group of five centrists separately issued a statement saying they would back the Build Back Better legislation pending a CBO score that assuages their concerns about long-term budget deficits.
In a statement after the House vote, President Joe Biden said the legislation would “create millions of jobs, turn the climate crisis into an opportunity, and put us on a path to win the economic competition for the 21st Century.” He also noted that the procedural vote on the second Democratic bill will “allow for passage of my Build Back Better Act in the House of Representatives the week of November 15th.” The bills together make up the core of President Biden’s domestic agenda. Democrats see the plans as complementary pieces designed to boost the economy, jolt the job market, provide a layer of insurance to working families and curb climate change.
President Joe Biden and Democrats have looked for a signature achievement they can point to on the 2022 midterm campaign trail as the president’s approval ratings flag. President Biden will welcome the developments, as House passage of the bill followed a strong October jobs report and approval of Pfizer’s Covid vaccine for 5-to-11-year-olds in the US. While President Biden could sign the infrastructure bill soon, the safety net and climate package will likely take weeks longer. The House will have to wait for a CBO score. The Senate may pass a different version of the plan, which would require another House vote. Senate Majority Leader Chuck Schumer has set a Thanksgiving target to pass the larger Democratic bill.
Despite much bipartisan support, many Democrats considered the infrastructure bill inadequate because it did not address issues including child care, pre-K education, Medicare expansion, and the enhanced child tax credit. Those policies, priorities for President Joe Biden and top Democrats, made it into the House version of the social safety net bill. Democratic leaders tied the proposals together in an effort to keep centrists and progressives on board with both plans. A thorny legislative process has unfolded for months as Democrats try to get disparate groups with varied visions of the federal government’s role in the economy to back both packages.
Job growth in the US rose in July at its fastest pace in nearly a year despite fears over the Coronavirus Delta variant and a tightening labor supply, the Labor Department reported on August 6. Nonfarm payrolls increased by 943,000 for the month while the Unemployment rate dropped to 5.4%, according to the Bureau of Labor Statistics. The payroll increase was the best since August 2020. Most economists expected 845,000 new jobs and a headline unemployment rate of 5.7% for July, thus the overall jobs gains exceeded their expectations. However, estimates were diverse amid conflicting headwinds and tailwinds and an uncertain path ahead for the economy. Additionally, average hourly earnings also increased more than expected, rising 0.4% for the month and are up 4% from the same period a year ago, at a time when concerns are increasing about persistent inflationary pressures. “The data for recent months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages,” the BLS said in the report, though it cautioned that the Coronavirus impact is still skewing data and wage gains are uneven across industries.
The drop in the US unemployment rate looked even stronger considering that the labor force participation rate ticked up to 61.7%, tied for the highest level since the pandemic hit in March 2020. A separate calculation that includes discouraged workers and those holding jobs part-time for economic reasons fell even further, to 9.2% from 9.8% in June. As has been the case for the past several months, leisure and hospitality led job creation, adding 380,000 positions, of which 253,000 came in bars and restaurants. The sector took the hardest hit during the pandemic but showed consistent gains during the economic reopening.
The July jobs numbers come amid a surge of new Coronavirus cases in the US and around the world, with the most severe illnesses happening in states with larger unvaccinated populations such as Alabama, Louisiana, Florida, Texas, and Missouri. The increase has raised fears that it could slow economic activity in a recovery that began in April 2020 and has shown resilience despite the periodic flareups of Covid cases. At the same time, the US is fighting a continuing battle with a scarcity of labor. Job placement site Indeed estimated there were 9.8 million job openings as of July 16, far more than the 8.7 million considered unemployed. In a survey of 5,000 job seekers, however, the amount of those citing health concerns as a reason for not looking for a job declined, with a growing number citing a lack of need due to a financial cushion as the top response.
Since the Coronavirus pandemic began in March of 2020, the US unemployment rate has remained elevated, peaking at 14.8% in April of 2020. Though the unemployment rate has tumbled roughly 9% since the pandemic began, it remains well above the 3.5% prior to the crisis. Federal Reserve policymakers have vowed to keep ultra-easy monetary policy in place until they see stronger signs of full employment, though that may risk higher inflation in the long term. Overall, the improving economic picture in the US shows that the economic policies implemented by the Biden Administration are working as intended and will allow the US to emerge from the Coronavirus pandemic in a relatively strong position.
Nonfarm payrolls rose by a lower than expected 661,000 in September, and the unemployment rate was 7.9%, the Labor Department said on October 2 in the final jobs report before the November election. Economists surveyed had been expecting a net job gain of 800,000, and the unemployment rate to fall to 8.2% from 8.4% in August. The payrolls miss was mainly due to a drop in government hiring as at-home schooling continued, and Census jobs fell. “The issue is momentum, and I think we’re losing it,” said Drew Matus, chief market strategist for MetLife Investment Management. “When you go through a significant disruption to the labor market, it takes time to fix itself. That’s without regard to whether there’s a virus.”
The decline in the unemployment rate came with a 0.3 percentage point drop in the labor force participation rate to 61.4%, representing a decline of nearly 700,000. However, a separate, more encompassing measure that counts discouraged workers and those working part-time for economic reasons also saw a notable decline, falling from 14.2% to 12.8%. The unemployment decline for African Americans was even sharper than the headline rate, falling from 13% to 12.1%. The Asian rate declined from 10.7% to 8.9%. Leisure and hospitality led job gains with 318,000 while retail added 142,000 and health care and social assistance increased by 108,000. As expected, government jobs were the biggest drag on the month, losing 216,000 due to a drop in local and state government education as many schools maintained at-home instruction due to the virus. A reduction in Census workers also pulled 34,000 from the total. In other sectors, health care and social assistance gained 108,000, professional and business services contributed 89,000 and the transportation and warehousing sector was up 74,000. Manufacturing grew by 66,000, financial activities added 37,000, and the other services category rose by 36,000. Markets reacted little to the report, with stocks still heading for a lower open following news that President Donald Trump said he and first lady Melania Trump tested positive for Coronavirus.
Despite the deceleration in job creation, there were some positive signs as the economy continues its pandemic-era recovery. Those reporting being on temporary layoff fell by 1.5 million to 4.6 million. Workers holding part-time jobs for economic reasons fell by 1.3 million to 6.3 million, and the totals for longer-term layoffs also decreased considerably. The temporary layoff total peaked at 18.1 million as payrolls fell by 22 million in March and April. However, permanent job losses increased by 345,000 to 3.8 million, in total a 2.5 million increase since February, the month before the World Health Organization declared the Coronavirus pandemic. “Permanent jobs losses rose by more than 300,000. That’s not a good thing. The labor force participation rate declined, which pulled the overall unemployment rate down. That’s not a good sign, either,” said Kathy Jones, head of fixed income at Charles Schwab. “We’re looking at state and local government layoffs, we’re looking at a higher level of permanent job losses and more people leaving the workforce. None of that is good for the long run.”
US Median Household Incomehit a record high in 2019, and the poverty rate fell, according to a government survey released on September 15 that offered a snapshot of the economy before millions of American jobs were destroyed by the Coronavirus pandemic. Census officials cautioned, however, that the Coronavirus pandemic impacted their data collection, which was conducted after lockdowns this year, and may have skewed the results. “Given data-collection challenges during the pandemic, we are concerned about bias in the 2019 estimate,” the census agency officials wrote in a blog post, explaining that lower-income and minority household response to the survey dropped.
The US Census Bureau said in their report that real median household income jumped 6.8% from $64,324 in 2018 to $68,703 last year, the highest since the agency began tracking the data in 1967. It also said the nation’s poverty rate fell last year to 10.5%, a 1.3-percentage-point drop. Another measure of poverty that adjusts for government aid programs for low-income Americans showed a drop to 11.7% last year from 12.8% in 2018. Simultaneously, however, the number of people without health insurance for at least part of the year hit 29.6 million, up 1 million from the year before. The number of uninsured children also grew.
The report offered a look back at the economy’s state before the Coronavirus outbreak hit the US in February and March of this year, shuttering many businesses as the country sought to contain the pandemic. Since then, more than 6.5 million people in the US have contracted the highly contagious virus, and more than nearly 200,000 have died. Vast swaths of the economy were devastated, and 22 million Americans lost their jobs. While activity is now rebounding, economists warn the recovery may be uneven as federal stimulus money runs out with no signs of replenishment. A potential second wave of Coronavirus infections this autumn and winter as people move back indoors also looms large.
President Donald Trump, who had staked his re-election on economic gains before the outbreak, has downplayed the impact of the virus and risk of another wave, as he has urged states to fully re-open. He has also repeatedly touted gains on Wall Street (a narrow gauge of economic performance) and pledged to rebuild the economy if he wins a second term. His Democratic rival in the Presidential election, former Vice President Joe Biden, has said the gains since Coronavirus emerged have been notched and have left many segments of the working population still reeling.
The US Economyadded around 1.4 million jobs last month, reflecting a slow return to labor market growth, according to data released on September 4 by the Bureau of Labor Statistics. The unemployment rate fell into the single digits for the first time since the Coronavirus pandemic began, dropping from 10.2 percent to 8.4 percent (still the highest rate since 2011), the monthly report showed. Before the coronavirus’ stranglehold on the economy, the rate was at 3.5 percent, the lowest since 1970. “Great Jobs Numbers!” President Donald Trump Tweeted after the numbers were released. “1.37 Million Jobs Added In August. Unemployment Rate Falls To 8.4% (Wow, much better than expected!). Broke the 10% level faster and deeper than thought possible.”
Great Jobs Numbers! 1.37 Million Jobs Added In August. Unemployment Rate Falls To 8.4% (Wow, much better than expected!). Broke the 10% level faster and deeper than thought possible.
The August data indicates a halting recovery of the more than 22 million jobs lost since March, with July’s revised total of 1.73 million gains and June’s addition of 4.8 million positions. “We have had three huge months of job gains, but so far have regained less than half of the losses in March and April,” said Dan North, senior economist at Euler Hermes North America. “Job gains so far have probably been the easy ones to get, where a business opened back up and brought back in its employees.” The payrolls report is the first one issued since the CARES Act expired, along with its $600 in additional weekly unemployment benefits. Lawmakers continue to debate the finer points of a further coronavirus fiscal aid package, with some Republicans expressing concern that the “generous” unemployment stipend acts as a deterrent to those who would otherwise be attempting a return to the workforce. The Federal Reserve noted in its most recent Beige Book on economic conditions that businesses who were looking to add employees found “day care availability, as well as uncertainty over the coming school year and jobless benefits” were the main factors impeding rehirings.
The August jobs snapshot comes on the heels of a decline in weekly initial jobless claims that showed 881,000 people filed for first-time unemployment benefits last week. While down from the Coronavirus pandemic peak of almost 7 million, it still indicates an elevated level far above the previous average of 200,000 claims a week. Layoff announcements have ramped up in recent days, with airlines warning of tens of thousands of layoffs as government aid expires, and Paycheck Protection Program funds dwindle for many business owners. The sluggish pace of economic recovery hit the stock market after a slew of disappointing economic data sparked a sell-off that included many of the highly valued tech stocks that have driven the market to multiple record highs since the pandemic began. Apple alone lost $180 billion on September 3, the biggest one-day loss on record for any company. In addition to the jobs report, the Labor Department issued a projection that the pace of job gains over the next decade would slow considerably, predicting that just 6 million new jobs would be created during the period of 2020-29. While that growth rate does not include the impact from the coronavirus, it does note that the virus is likely to create “new structural changes to the economy.”
The US Economy added another 1.8 million jobs in July, a sharp slowdown from June and a small step for an economy that is still down almost 13 million jobs since the start of the Coronavirus pandemic. It was the third straight month of improvement after the spring lockdown that decimated the labor market, and the July job gain exceeded economists’ expectations. Even so, it was far fewer than the 4.8 million jobs added in June. The unemployment rate fell to 10.2%, the Bureau of Labor Statistics reported August 9 but remains above the recent highs of 10% that were recorded in November of 1982 and October of 2009.
Overall, the most recent jobs report presented a mixed picture, and economists are still trying to come to grips with how the labor market is behaving in this unparalleled situation. For example, the number of people working part-time rose by 803,000 to 24 million in total in July. The government defines part-time work as anything under 35 hours per week. “We added more jobs than most people expected, but the gains really were disproportionately part-time workers,” said Kate Bahn, economist, and director of labor market policy at the Washington Center for Equitable Growth. “To me that means even if workers are coming back it’s to jobs that pay less, and families will be worse off.” Meanwhile, the unemployment rate fell in all demographic groups. The rate remains by far the highest for Black workers at 14.6%, which is concerning, Bahn said. “Research from previous downturns suggests that Black workers are the most likely to be displaced,” she added. Then there are seasonal adjustments, which are based on historical trends in the job market, but because the pandemic is unlike any other moment in history, they are distorting the data at the moment. Without seasonal adjustments, only 591,000 jobs were added in July.
One positive sign in this jobs report is the number of permanent job losses: it was more or less flat from June at 2.9 million. This might not sound exciting, but it would have been very bad news for the recovery had the number gone up. “Granted still more than double from before the crisis, but we’ll take the one-month reprieve,” said Daniel Zhao, senior economist at Glassdoor. Since the Coronavirus pandemic hit, the government has struggled to count the enormous number of people who are out of work. That’s in part because it has been increasingly difficult for workers themselves to discern whether they have been temporarily laid off or employed but not at work. The share of misclassified responses was smaller in June and July than in the months before, the BLS said. Including the misclassified workers, the July unemployment rate would have been about one percentage point higher than reported.
The reopening of the economy and a resurgence in Coronavirus infections in some states, paired with business and individuals running out of federal aid, has created a unique set of conditions for the jobs market. A survey from Cornell University showed that 31% of workers who were recently rehired have lost their jobs for a second time during the pandemic. Another 26% have been told that they might get laid off again. Meanwhile, the Federal Reserve Bank of St. Louis said states with more Coronavirus cases since June also registered the weakest employment recovery. This was most notably true for Arizona, Florida, California, and Texas.
The August 9 jobs report comes during tense times in Washington, as Republicans and Democrats are butting heads over the next stimulus bill. One point of contention is the government’s boost of unemployment benefits. The CARES act provided a weekly boost of $600 to regular jobless aid. But this provision ran out on July 31. Now Congress is arguing about how to proceed: Democrats want to keep the $600 weekly supplement for the rest of the year, while Republicans want to cut it to $400 a week. For millions of Americans, the benefit expansion contributes a large portion of their income at the moment, so cutting it could hamper the recovery. At the same time, some economists believe that too much unemployment aid actually keeps people from returning to work. The question is what is too much aid during an economic crisis of unprecedented proportions.
The US Economy contracted at a 32.9% annual ratefrom April through June, its worst drop on record, the Bureau of Economic Analysis said on July 30. Business ground to a halt during the pandemic lockdown inbeginnign in early March of 2020, and America plunged into its first recession in 11 years, putting an end to the longest economic expansion in US history and wiping out five years of economic gains in just a few months. A recession is commonly defined as two consecutive quarters of declining gross domestic product, the broadest measure of the economy. Between January and March, GDP declined by an annualized rate of 5%. But this is no ordinary recession. The combination of public health and economic crises is unprecedented, and numbers cannot fully convey the hardships millions of Americans are facing. In April alone, more than 20 million American jobs vanished as businesses closed and most of the country was under stay-at-home orders. It was the biggest drop in jobs since record-keeping began more than 80 years ago. Claims for unemployment benefits skyrocketed and have still not recovered to pre-pandemic levels. While the labor market has been rebounding since some states began to reopen, bringing millions back to work, the country is still down nearly 15 million jobs since February.
The Coronavirus pandemic pushed the US economy off a cliff. The second-quarter GDP drop was nearly four times worse than during the peak of the 2007-2010 financial crisis, when the economy contracted at an annual rate of 8.4% in the fourth quarter of 2008. Quarterly GDP numbers are expressed as an annualized rate. This means that the economy did not actually contract by one-third from the first quarter to the second. The annualized rate measures how much the economy would grow or shrink if conditions were to persist for 12 months. Not annualized, GDP declined by 9.5% between April and June, or by $1.8 trillion. But by either measure, it was still the worst quarter on record. The US only began keeping quarterly GDP records in 1947, so it is difficult to compare the current downturn to the Great Depression. Earlier recorded quarterly declines also pale in comparison to this year. Between April and June of 1980 (the start of the 1980-82 recession), the economy contracted at an annual rate of 8% on the heels of rising oil prices and restrictive monetary policy to control inflation. Additionally, in early 1958, GDP declined by an annualized 10%, as production slowed and high-interest rates put an end to the post-World War II expansion. The downturn followed the Asian flu pandemic of 1957, which killed 116,000 people in the US, according to the Center for Disease Control.
In response to the Coronavirus pandemic shutdown, the US government has deployed trillions of dollars in monetary and fiscal stimulus to help the country through the recession. Loan programs for companies, expanded unemployment benefits, and checks sent directly to many Americans were designed to get the economy back on track as quickly as possible. Economists predict the current, third quarter of the year will witness a sharp upswing, with the Federal Reserve Bank of New York, for example, forecasting an annualized 13.3% jump between July and September. While that would be good news, it does not mean the crisis is over. Earlier this week, the Fed extended its various lending programs through the end of the year to help business and market functioning. The central bank’s main street lending facility that is geared at small and medium-sized companies became operational only in mid-June, three months after the lockdown began.
President Donald Trumpannounced regulatory changes to the National Environmental Policy Act on July 15, a change that will speed up approval of federal projects such as mines, highways, water infrastructure, and gas pipelines, effectively weakening what’s considered to be a landmark conservation law. President Trump announced the implementation of the newly revised regulations in Georgia at the UPS Hapeville Airport Hub, which is set to benefit from the expedited review of a highway expansion project that will allow the hub’s operations to be more efficient. Trump claimed that “mountains and mountains of red tape” slowed the approval and development of infrastructure projects, but added that “all of that ends today.” “Today’s action completely modernizes the environmental review process under the National Environmental Policy Act of 1969. We are cutting the federal permitting timeline … for a major project from up to 20 years or more … down to two years or less,” Trump said, later adding that at “the same time, we’ll maintain America’s gold standard environmental protections.”
President Donald Trump announced his administration’s plans to rewrite the NEPA regulations in January, saying at the time that the existing regulations “(led to) endless delays, waste money, keep projects from breaking ground and deny jobs to our nation’s incredible workers. The administration claims the change will speed up the process for getting environmental reviews approved that are required for major infrastructure projects. “You spend three, four, five years on the environmental review before you ever break ground. That’s a problem,” Environmental Protection Agency administrator Andrew Wheeler said in an interview with Gray TV. Environmental advocacy groups view the policy change as another example of the Trump administration dismantling important conservation safety guards that protect the environment and public health from pollution. The change “drastically curtails environmental reviews for thousands of federal agency projects nationwide, a move that will weaken safeguards for air, water, wildlife, and public lands,” the Center for Biological Diversity, an advocacy group, said in a statement responding to the decision.
NEPA, signed into law in 1970 by President Richard Nixon, is considered one of the foundational environmental laws formed at the beginning of the modern environmental movement. Rolling back this policy “may be the single biggest giveaway to polluters in the past 40 years,” according to Brett Hartl, Center for Biological Diversity government affairs director. “The Trump administration is turning back the clock to when rivers caught fire, our air was unbreathable, and our most beloved wildlife was spiraling toward extinction. The foundational law of the modern environmental movement has been turned into a rubber stamp to enrich for-profit corporations, and we doubt the courts will stand for that,” Hartl said in a statement. Environmental advocacy groups such as the National Resource Defense Council Inc. and the Sierra Club believe that the change will harm minority communities more than others. “NEPA gives a voice to communities whose health and safety would be threatened by destructive projects, and it is despicable that the Trump administration is seeking to silence them,” Sierra Club executive director Michael Brune said in a statement. “As the country faces a global pandemic and grapples with persistent racial injustice, the last thing communities need is an attack on this bedrock environmental and civil rights law.” In contrast, Mike Sommers, the President and CEO of the American Petroleum Institute, which represents America’s oil and natural gas industry, said in a statement that the regulatory changes are “essential to US energy leadership and environmental progress, providing more certainty to jumpstart not only the modernized pipeline infrastructure we need to deliver cleaner fuels but highways, bridges and renewable energy.”
The House of Representatives on July 1 passed a $1.5 trillion infrastructure bill that would sharply increase Infrastructure spending on roads and transit, push for deep reductions in pollution, direct billions to water projects, affordable housing, broadband and schools, and upgrade hospitals and US Postal Service trucks. House Speaker Nancy Pelosi (D-CA) said Democrats were making good on a promise to rebuild America with “green, resilient, modern and job-creating infrastructure,” adding that the Moving Forward Act “shows that everything in our country is connected, from the education of our children to the technologies of the future to the road map to get there.” The bill is meant, in part, to address the expiration in September of a law authorizing spending on highways, transit, and other transportation programs. Backers, including Transportation Committee Chairman Peter DeFazio (D-OR), said the bill represents an ambitious, years-in-the-making push to buttress and expand aging infrastructure in a sustainable way. The bill’s passage “is proof that finally, there is a majority of us in Congress who won’t accept the status quo and instead are willing to fight for a new vision” that puts “millions of people to work in jobs that cannot be exported, while harnessing American-made materials, ingenuity, and innovation,” DeFazio said.
House Republicans objected to the bill’s concentration on reducing carbon pollution and slammed the process that resulted in what they dismissed as the “My Way or the Highway” bill. Pelosi is seeking to “heap an irresponsible amount of debt onto our children instead of seeking market-driven, collaborative, bipartisan solutions to improve our infrastructure,” said Congressman Sam Graves (R-MO) the ranking Republican on the House Transportation Committee. The bill passed largely along party lines after days of debate and amendments, with three Republicans voting yes and two Democrats casting no votes. The bill now goes to the Senate, where it drew immediate criticism from Majority Leader Mitch McConnell (R-KY). “House Democrats appear addicted to pointless political theater,” McConnell said. “So naturally, this nonsense is not going anywhere in the Senate. It will just join the list of absurd House proposals that were only drawn up to show fealty to the radical left.” Senator John Barrasso (R-WY), chairman of the Environment and Public Works Committee, which passed a narrower, bipartisan transportation bill last July, called the House bill “a road to nowhere” and urged the House to “get serious about infrastructure.”
If the full Senate passes transportation or other combined infrastructure bill, Congress could move to create a conference committee to seek to reconcile the diverging visions, congressional aides said. Or they could try to come to an agreement on a temporary extension of the five-year transportation law, known as the Fast Act, that expires in September, though members from both parties say they oppose such a move. Either would be complicated further by broad differences over how such infrastructure should be paid for, a disconnect that has stymied many plans in recent years, despite widespread bipartisan and popular support for addressing infrastructure needs.
The US economyadded a record 4.8 million jobs in June, according to federal data released on July 2, but a surge in new Coronavirus infections and a spate of new closings threatens the nascent recovery. Two key federal measurements showed the precarious place the economy finds itself in three and a half months into the pandemic as the country struggles to hire back the more than 20 million workers who lost their jobs in March and April. While companies have continued to reopen, a large number of Americans are finding their jobs are no longer available. The unemployment rate in June was 11.1 percent, the Bureau of Labor Statistics said, down from a peak of 14.7 percent in April but still far above the 3.5 percent level notched in February. And another 1.4 million Americans applied for unemployment insurance for the first time last week and more than 19 million people are still receiving unemployment benefits, stubbornly high levels that show how many people are struggling to find or keep work. The Congressional Budget Office said the Coronavirus pandemic gave such a shock to the labor market that it would not fully recover for more than 10 years.
President Donald Trump touted the jobs that were added at a news conference called shortly after they were released, saying they were a sign that “America’s economy is now roaring back to life like nobody has ever seen before.” “All of this incredible news is the result of historic actions my administration has taken,” President Trump said. But his top aides acknowledged there was still a long way to go. “There is still a lot of hardship, and a lot of heartbreak, in these numbers,” National Economic Council Director Larry Kudlow said. “I think we have a lot more work to do.” The stock market initially rose on the news, with the Dow Jones industrial average rising 400 points, or 1.5 percent, before retreating. It closed up 92 points on the day.
Economists called the 4.8 million jobs added encouraging, saying they were a sign that the massive financial incentives that Congress passed appeared to have succeeded at stanching even greater job loss. But the good news came with a couple of significant asterisks: It was gathered the week of June 12, when the country was reporting less than 25,000 new cases a day, not the current average of more than 40,000 that has sent new closures and shutdowns cascading across states and counties. “The pandemic pushed us into a very deep economic hole,” said Mark Zandi, chief economist at Moody’s Analytics. “We can certainly fall back.” The more than 14.7 million people who are still out of work have left the country with an unemployment rate higher than any point during the Great Recession. The unemployment insurance data, based on statewide claims that are separate from the survey that informs the jobs report, paints an even less sanguine picture: Last week was the 15th straight where unemployment claims exceeded 1 million, a sign that the economic recovery has not taken hold for many Americans.
The data bring into sharper focus the turmoil facing the US economy after many businesses sent workers home in March during the beginning of the spike in deaths caused by the virus. Many companies began rehiring in May and June, but there are signs that some workers are getting laid off for the second time in just a few months. Many Americans remain employed but are working drastically reduced schedules, more than 9 million workers reported working part-time because of economic reasons, more than double the level in February before the pandemic. Still, a participation rate of 61.5 percent in June, slightly up from April and May but nearly a percentage point below February, indicates that others may be leaving the labor force altogether, an echo of the deep economic turbulence in the Great Recession. Economists said there are other reasons to be concerned as incentives for businesses to retain employees and some benefits that have allowed people out of work to stay afloat financially are winding down without more federal action.
Federal and state officials struggled to time their reopening efforts in April and May, in some cases ignoring warnings from public health officials. Now, cases in some of the states that reopened the fastest, or with the loosest restrictions, are seeing the biggest spikes, such as Florida, Arizona, and South Carolina. In recent days, Texas shut down all bars just weeks after they had reopened. California announced the closure of bars and indoor dining in 19 counties, more than 70 percent of the state. And at least nine other states have slowed or reversed their reopenings. Restaurant bookings have begun to sink in hard-hit states such as Florida, Texas, and Arizona. Job postings on the Indeed website, though up from a low of 39 percent, are still down 24 percent from last year.
The American economy defied forecasts for a Depression-style surge in Unemployment this week, signaling the economy is picking up faster than anticipated from the coronavirus-inflicted recession amid reopenings and government stimulus. A broad gauge of payrolls rose by 2.5 million in May, trouncing forecasts for a sharp decline following a 20.7 million decrease during the prior month that was the largest in records back to 1939, according to Labor Department data released on June 5. The figures were so astonishing that President Donald Trump held a news conference, where he called the numbers “outstanding” and predicted further improvement before he is up for re-election in November. While the overall picture improved, there remain several underlying issues facing the economy. For example, 21 million Americans remain unemployed with a jobless rate higher than any other time since 1939, indicating a full recovery remains far off with many likely to suffer for some time. And the return to work is uneven, with unemployment ticking up among African Americans to 16.8%, matching the highest since 1984, even as unemployment rates declined among white and Hispanic Americans. That comes amid nationwide protests over police mistreatment of African-Americans, which have drawn renewed attention to race-based inequality.
The latest figures may give a boost to President Donald Trump, who has siginficantly fallen behind Democratic challenger Joe Biden in polls amid dissatisfaction with his response to the pandemic and the death of George Floyd. The numbers could also reduce pressure on policy for another round of fiscal support, with Democrats and Republicans at odds over the timing and scope of new measures following record aid approved by Congress. “The only thing that can stop us is bad policy, like raising taxes and the Green New Deal,” President Trump said on June 5. He also said that he will ask Congress to pass more economic stimulus, including a payroll tax cut.
One caution noted by the US Labor Department is that the unemployment rate “would have been about 3 percentage points higher than reported,” so 16.3% if data were reported correctly, according to the agency’s statement. That refers to workers who were recorded as employed but absent from work due to other reasons, rather than unemployed on temporary layoff. The broader U-6, or underemployment rate, which includes those who have not searched for a job recently or want full-time employment, fell only slightly to 21.2% in May from 22.8%, which is its highest rate since 1982. In February, it was 7%, with the main unemployment rate at a half-century low of 3.5%.
On May 15, the House of Representatives passed a $3 trillion tax cut and spending bill aimed at addressing the devastating economic fallout from the growing Coronavirus outbreak by directing huge sums of money into all corners of the economy. The Trump Administration and Senate Republicans have decried the measure’s design and said they will cast it aside, leaving uncertain what steps policymakers might take as the economy continues to face severe strains. The sweeping legislation, dubbed the “Heroes Act, passed 208-199. Fourteen Democrats defected and opposed the bill, reflecting concerns voiced both by moderates and liberals in the House Democratic caucus about the bill’s content and the leadership-driven process that brought it to the floor. The bill won support from just one Republican, Congressman Peter King of New York, generally regarded as a relatively moderate Republican. House Speaker Nancy Pelosi (D-CA) pushed forward despite the divisions in her caucus and Republican opposition, arguing that the legislation will put down a marker for Democrats’ priorities and set the stage for negotiations on the next bipartisan relief bill. Americans “are suffering so much, in so many ways. We want to lessen their pain,” Pelosi said during the House floor debate. “Not to act now is not only irresponsible in a humanitarian way, it is irresponsible because it’s only going to cost more, more in terms of lives, livelihood, cost to the budget, cost to our democracy.”
As Washington scrambled to deal with the growing impact of the coronavirus pandemic earlier this year, the Trump administration, state governments, local officials, and businesses took steps to send many Americans home as a way to try to contain the contagion. This led to a mass wave of layoffs that began more than two months ago and has continued every week since, particularly as Americans have sharply pulled back spending. Congress has passed four bipartisan coronavirus relief bills that have already cost around $3 trillion to try to blunt the economic fallout. While Republicans and Trump administration officials agree that more action will be necessary at some point, many say it’s time to pause and see how the programs already funded are working before devoting even more federal funds to the crisis as deficits balloon. “The president has said he would talk about state and local aid, but it cannot become a pretext for bailing out blue states that have gotten themselves into financial trouble, so while he’s open to discussing it he has no immediate plans to move forward,” White House press secretary Kayleigh McEnany said, adding, “The Pelosi bill has been entirely unacceptable.”
In a reflection of clashing priorities that might make it difficult to come to an agreement on additional relief legislation, White House National Economic Council Director Larry Kudlow floated slashing the 21 percent corporate tax rate in half for companies that return operations to the United States from overseas, a dramatic change that drew immediate opposition from Democrats. President Donald Trump has also called for a payroll tax cut and new legal liability protections for businesses in any future legislation, policies that have already been rejected by Democrats, and, in the case of the payroll tax cut, some Republicans as well. President Trump himself is pushing for the economy to reopen as quickly as possible and said recently that he’s in “no rush” to sign off on additional spending.
President Donald Trump backed off his plan to impose tariffs on all Mexican goods and announced through Twitter on June 7 that the US had reached an agreement with Mexico to reduce the flow of migrants to the Southwestern border. President Trump tweeted the announcement only hours after returning from Europe and following several days of intense and sometimes difficult negotiations between American and Mexican officials. Trump’s threat that he would impose potentially crippling tariffs on the US’ largest trading partner and one of its closest allies brought both countries to the brink of an economic and diplomatic crisis, only to be yanked back from the precipice nine days later. The threat had rattled companies across North America, including automakers and agricultural firms, which have built supply chains across Mexico, the US, and Canada.
I am pleased to inform you that The United States of America has reached a signed agreement with Mexico. The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended. Mexico, in turn, has agreed to take strong measures to….
Business leaders in the US, Mexico, and Canada had warned that the Trump Administration’s proposed tariffs would increase costs for American consumers, who import a whole host of goods ranging from automobiles to appliances from Mexico, and prompt retaliation from the Mexican government in the form of new trade barriers that would damage the US economy. But the trade war ended before it began, forestalling that economic reckoning and an intraparty war that President Donald Trump had created by threatening tariffs to leverage immigration policy changes. Trump’s tactic had drawn protests from Republicans, including many Senators who have long opposed tariffs and worried the measure would hurt American companies and consumers. In an unusual show of force against their own party’s President, Republican Senators had threatened to block the tariffs if President Trump moved ahead with them, and had demanded a face-to-face meeting with Trump before any action. For Mexico, Trump’s threat was a replay of past episodes in which he ranted about the country’s lack of immigration enforcement. This year, he threatened to shut down the entire Southwestern border, backing off only after aides showed him evidence that Mexican authorities were taking aggressive action to stop migrants.
According to a US-Mexico Joint Declaration distributed late on June 7, Mexico agreed to, “take unprecedented steps to increase enforcement to curb irregular migration,” including the deployment of its national guard throughout the country to stop migrants from reaching the US. The declaration, distributed by the State Department, said Mexico had also agreed to accept an expansion of a Trump administration program that makes some migrants wait in Mexico while their asylum claims are heard in the US. “The United States looks forward to working alongside Mexico to fulfill these commitments so that we can stem the tide of illegal migration across our southern border and to make our border strong and secure,” Secretary of State Mike Pompeo said in a statement. But the declaration by the two countries included an ominous warning, as well, stating that if Mexico’s actions “do not have the expected results,” additional measures could be taken. The declaration said the two countries would continue talking about other steps that could be announced within 90 days to increase enforcement to curb irregular migration,” including the deployment of its national guard throughout the country to stop migrants from reaching the US.
Black Friday sales this year revealed a major trend in favor of online retailers, perhaps signaling the end of traditional “big box” retailers as we know them today.
More shoppers turned to the internet for deals to kick off the holiday shopping season as opposed to shopping at traditional retail stores, data released on November 24 revealed. Black Fridaypulled in $6.22 billion in online sales, up nearly 24% percent from a year ago and set a new record high, according to Adobe Analytics, which tracks transactions for 80 of the top 100 internet retailers in the US including Walmart and Amazon. These figures arrived as many retailers have pushed big digital deals, days in advance of the holiday weekend.
The Friday after Thanksgiving this year was also the first day in history to see more than $2 billion in sales stemming from smartphones, said Adobe. The group found ~34% of e-commerce sales Friday came from mobile devices, compared with ~29% in 2017. “Retailers have done their part of building better mobile experiences for consumers and turning nearly 10 percent more smartphone visitors into buyers this Black Friday versus last,” said Taylor Schreiner, director of Adobe Digital Insights. With regards to actual smartphone sales this Black Friday, smartphones using Droid OS outsold Apple iPhones by nearly 10%, perhaps signaling a significant decline in Apple’s overall share of the smartphone market.
Buy online pick up in stores continues to be a popular option for shoppers this holiday season, with “click-and-collect” orders up 73% from Thursday to Friday. Target, Kohl’s, Kmart and Walmart are just a few companies that have been touting that option this year, hoping that when customers arrive to pick up their items, they will buy more items as well. Earlier in the week, sales online Thanksgiving Day totaled $3.7 billion, up 28% from a year ago, making it the fastest-growing day for e-commerce sales in history. Thursday also saw $1 billion in sales from smartphones, with shoppers spending 8% more online Thursday compared with a year ago.
For the first time, online prices Thanksgiving Day “were as low as on Black Friday,” potentially stealing some of Black Friday’s traditional crowds of shoppers at malls and other stores. There were reports that traffic at many shopping malls Friday was lighter than in past years. Instead, more consumers turned to their phones or desktop computers to grab bargains. Kohl’s said it has a record day for online sales this Thursday, with Cyber Monday still to come. Adobe is expecting Cyber Monday sales online to set a new record of $7.8 billion, up nearly 18% from last year.
On November 23, the US government released a long-awaited report stating the effects of global warming and climate change in the US are worsening and that the potential for irreversible environmental damage is steadily increasing. The report’s authors, who represent numerous federal agencies, say they are more certain than ever that climate change poses a severe threat to Americans’ health and pocketbooks, as well as to the country’s infrastructure and natural resources. And while it avoids policy recommendations, the report’s sense of urgency and alarm stands in stark contrast to the lack of any apparent plan from President Trump to tackle the problems, which, according to the government he runs, are increasingly dire.
The Congressionally mandated document, the first of its kind issued during the Trump administration, details how climate-fueled disasters and other types of worrisome changes are becoming more commonplace throughout the country and how much worse they could become in the absence of efforts to combat global warming. The report notes that Western mountain ranges are retaining much less snow throughout the year, threatening water supplies below them. Coral reefs in the Caribbean, Hawaii, Florida and the Pacific territories administered by the US are experiencing severe bleaching events. Wildfires are devouring ever-larger areas during longer fire seasons. And the country’s sole Arctic state, Alaska, is seeing a staggering rate of warming that has upended its ecosystems, from once ice-clogged coastlines to increasingly thawing permafrost tundras.
The National Climate Assessment’s publication marks the government’s fourth comprehensive look at climate change impacts on the US since 2000. The last came in 2014. Produced by 13 federal departments and agencies and overseen by the U.S. Global Change Research Program, the report stretches well over 1,000 pages and draws more definitive, and in some cases more startling, conclusions than earlier versions. The authors argue that global warming “is transforming where and how we live and presents growing challenges to human health and quality of life, the economy, and the natural systems that support us.” And they conclude that humans must act aggressively to adapt to current impacts and mitigate future catastrophes “to avoid substantial damages to the U.S. economy, environment, and human health and well-being over the coming decades.” “The impacts we’ve seen the last 15 years have continued to get stronger, and that will only continue,” said Gary Yohe, a professor of economics and environmental studies at Wesleyan University who served on a National Academy of Sciences panel that reviewed the report. “We have wasted 15 years of response time. If we waste another five years of response time, the story gets worse. The longer you wait, the faster you have to respond and the more expensive it will be.”
That urgency is at odds with the stance of the Trump administration, which has rolled back several Obama-era environmental regulations and incentivized the production of fossil fuels. President Trump also has said he plans to withdraw the nation from the Paris climate accord and questioned the science of climate change just last month, saying on CBS’s “60 Minutes” that “I don’t know that it’s man-made” and that the warming trend “could very well go back.” Furthermore, as the Northeast faced a cold spell this week, Trump tweeted, “Whatever happened to Global Warming?” This shows a misunderstanding that climate scientists have repeatedly tried to correct, a confusion between daily weather fluctuations and long-term climate trends. President Trump did not immediately respond to a request for comment on Friday’s report. However, the administration last year downplayed a separate government report calling human activity the dominant driver of global warming, saying in a statement that “the climate has changed and is always changing.”
In the East, it could be the COLDEST New Year’s Eve on record. Perhaps we could use a little bit of that good old Global Warming that our Country, but not other countries, was going to pay TRILLIONS OF DOLLARS to protect against. Bundle up!
This video by PressTV presents a review of President Donald Trump’s first full year in office. One year has passed since Donald Trump has been elected US President. Since then, the world has seen a US President unlike any other. One that is aggressive, impulsive, uninterested in politics, and egotistical. Despite coming into office with a grand series of promises to change American politics for the better, the case can be made that the policies pursued by the Trump Administration have changed American politics for the worst. Trump has thus far failed to realize any of his campaign promises, fanned the conspiracy flames regarding his relationship with Russia, contradicted and insulted his staff, and made enemies of allies throughout the world. Additionally, President Trump has attacked the governmental institutions he oversees, threatened to use his powers to ruin the lives of his political opponents, waged war against members of his own party, and engaged in race-baiting, sexism, ableism, and religious bigotry when pursuing his destructive agenda.
One such area in which President Donald Trump left his mark during his first year was his immigration executive order banning (mostly Shi’a Muslim) immigrants, travelers, and refugees from seven majority-Muslim countries (Syria, Iran, Iraq, Yemen, Sudan, Somalia, and Libya). This action ignited a firestorm of protest and revealed the bigoted, white supremacist agenda underlying the Trump Administration’s policies. President Trump also rattled the nuclear-saber more than any other President in US history with his incitement of North Korea, going as far to threaten the North Korean government with “fire and fury.” Many politicians on both sides of the aisle worry that Trump has misused the moral authority surrounding the office of the Presidency through such statements and actions.
President Donald Trump claimed during his first year in office that he has the unilateral authority to order the Justice Department to open or close investigations into his political opponents. Such rhetoric threatens to set a negative precedent in future Administrations that goes directly against the principles of separation of power spelled out in the US Constitution. President Trump’s outreach to autocratic regimes such as Saudi Arabia and Israel further characterized his first year in office. By backing the Saudi Crown Prince Mohammad bin Salman, President Trump has given the green light for Saudi Arabia to escalate its three-year-long intervention in Yemen, which has resulted in the deaths of thousands of innocent people and has encouraged hatred towards Shi’a Muslims throughout the world. Additionally, President Trump’s choice to recognize Jerusalem (“al-Quds” in Arabic) as the capital of Israel has encouraged the Israeli regime to expand its crusade against the Palestinian people.
President Donald Trump also left a negative mark within the realm of international politics and has adopted a firm, neoconservative view regarding the role of the US in the world. President Trump has repeatedly denounced the Iranian nuclear deal, calling it the “worst deal ever negotiated” despite the fact that it was upheld by numerous organizations, most notably the United Nations and International Atomic Energy Agency (IAEA). Additionally, President Trump has proposed a hardliner stance towards Iran, calling it a “terrorist nation” and calling for US military action to remove the current Iranian government from power. These actions on the part of the President have led to many European leaders such as German Chancellor Angela Merkel and French President Emmanuel Macron to rethink their reliance on US political and diplomatic leadership on the world stage.
In terms of domestic policy, President Donald Trump generally has had an abysmal first year in office. Trump failed to follow through on repealing The Patient Protection Affordable Care Act (“Obamacare”) despite the fact that his party controls both houses of Congress, and has relied on Executive Orders more often than any other first-year President in US history. The only true legislative achievements of President Trump’s first year in office are his nomination of Neil Gorsuch to the Supreme Court and the passage of the Tax Cuts and Jobs Act of 2017. Many critics argue that the presence of Neil Gorsuch on the Supreme Court will move the Judicial branch far to the right and have a profound (and what many view as a negative) impact on decisions such as drug policy, women’s rights, abortion, gay rights, and electoral reform. Additionally, nearly all economic organizations point out that the Tax Cuts and Jobs Act is a clear giveaway to the wealthiest 1% and only serve to further the widening income gap between the wealthy and the poor.
The Republican Party is one of the two main political parties currently active in the United States. Founded by anti-slavery activists, economic modernizers, and liberal Whigs and Democrats in 1854, the Republicans dominated politics nationally and was the majority political party in the Northeast, Midwest, and Great Plains for most of the period between 1854 and 1932. The Republican party has won 24 of the last 40 U.S. presidential elections, and there has been a total of 19 Republican Presidents between 1860 and 2016, the most from any political party.
Liberal Republicans & The Civil War
The Republican Party was founded in Ripon, Wisconsin in 1854 and soon became the main anti-slavery political party within the US.
The Republican Party was officially formed in the small town of Ripon, Wisconsin on March 20, 1854, as a coalition of anti-slavery Whigs and Democrats opposed to the Kansas–Nebraska Act, which opened Kansas Territory and Nebraska Territory to slavery and future admission as slave states, thus repealing the 34-year prohibition on slavery in territories north of the Mason–Dixon line. This change was viewed anti-slavery members of Congress as an aggressive, expansionist maneuver by the slave-owning South. In addition to supporting an anti-slavery platform, the Republican Party followed a platform based on economic modernization, a more open interpretation of the constitution, expanded banking, openness to new immigrants, and giving free western land to farmers as a way to discourage the spread of slavery to the Western territories. Most of the support for the new political party came from New England (particularly Vermont, Maine, and parts of Upstate New York), the Midwest, and certain areas in the Upper South such as Eastern Tennessee, Southeastern Kentucky, and Western Virginia (regions where slavery was non-existent).
The Republican Party almost immediately made a mark on American politics and soon superseded the Whig Party as the chief opposition party. The first Republican Presidential nominee was John Frémont, a former general during the Mexican-American War and a strong opponent of the spread slavery. In the 1856 Presidential Election, Frémont scored 33% of the vote and came very close to defeating Democratic candidate James Buchanan in the Electoral College. The strong performance of the Republican Party was an impressive feat despite the fact that the party lacked a strong organizational structure and was not on the ballot in all states. The Republican Party built upon their successes by winning control of both House of Congress in the 1858 midterm elections.
The election of Abraham Lincoln in 1860 and the subsequent start of the Civil War led to the first era of Republican domination of the American political system.
The election of Abraham Lincoln in 1860 and the subsequent start of the Civil War opened a new era of Republican dominance at the federal level known as the Third-Party System. President Lincoln proved brilliantly successful in uniting the factions of his party to fight for the Union. Most of the remaining Democrats at first were War Democrats and supportive of the Union war effort until late 1862. When in the Fall of 1862 Lincoln added the abolition of slavery as one of the leading war goals, many War Democrats became “Peace Democrats” and thus became more sympathetic to the cause of the Confederacy. The Republicans condemned the peace-oriented Democrats as disloyal and won enough War Democrats to maintain their Congressional majority in 1862. In 1864, the Republicans formed a coalition with many War Democrats (such as Tennessee military governor Andrew Johnson) as the National Union Party which reelected Lincoln in a landslide.
Nearly all of the state Republican parties accepted the idea of the abolition of slavery except Kentucky. In Congress, the Republicans established legislation to promote rapid modernization, the creation of national banking system, high tariffs, the first income tax, paper money issued without backing (“greenbacks”), a large national debt, homestead laws, federal infrastructure spending (particularly on the railroads and industries), and federal aid for education and agriculture. These legislative efforts added to the perception that the Republican Party was the more liberal of the two main political parties.
Post Civil-War Republicans
After the successful conclusion of the Civil War in 1865, the Republican Party leadership was faced with the challenge of Reconstruction. The Republican Party soon became split between the moderates (who favored a lenient approach to Reconstruction) and the Radical Republicans (who demanded aggressive action against slavery and vengeance toward former Confederates). By 1864, a majority of Republicans in Congress were part of the Radical branch of the party. These tensions reached their boiling point after President Lincoln’s assassination in April of 1865. The Radical Republicans at first welcomed President Andrew Johnson (Lincoln’s second Vice President and a Southern Democrat who supported the Union), believing that he would take a hard line in punishing the South and enforce the rights of former slaves. However, Johnson denounced the Radicals and attempted to ally with moderate Republicans and Democrats. The showdown came in the Congressional elections of 1866, in which the Radicals won a sweeping victory and took full control of Reconstruction, passing laws over President Johnson’s veto. President Johnson was impeached by the House of Representatives in 1868 but was acquitted by the Senate by only one vote.
The Republican Party of the 1870s sought to establish a viable political coalition based on the ideas of racial equality and progressive public policy.
With the election of Ulysses S. Grant in 1868, the Radicals had control of Congress, the party structure, and the army and sought to build a Republican base in the South using the votes of Freedmen, Scalawags, and Carpetbaggers, supported directly by the US army. Republicans all throughout the South formed clubs called Union Leagues that mobilized the voters, discussed policy issues and fought off white supremacist attacks. President Grant strongly supported radical reconstruction programs in the South, the Fourteenth Amendment and equal civil and voting rights for the freedmen. Despite President Grant’s popularity and devotion to the cause of racial and social equality, his tolerance for corruption led to increased factionalism in the Republican Party. The economic depression of 1873 energized the Democrats at the Congressional level. The Democrats won control of the House of Representatives in 1874 and formed “Redeemer” coalitions which recaptured control of each southern state. Reconstruction came to an end when an electoral commission awarded the contested election of 1876 to Republican Rutherford B. Hayes, who promised through the unofficial Compromise of 1877 to withdraw federal troops from the control of the last three southern states (Mississippi, South Carolina, and Louisiana). The South then became known as the Solid South, giving overwhelming majorities of its electoral votes and Congressional seats to the Democrats for the next century.
Economic Conservatism
The Republican Party by and large remained the dominant political party at the Presidential level for the next five decades, with the Democrats only winning the Presidency in 1884, 1892, 1912, and 1916. Starting in the mid-1890s, both of the political parties began to shift on economic policy due to events such as the 1893-1897 economic depression. During the 1896 Presidential Election, the Democrats nominated former Congressman William Jennings Bryan of Nebraska, whereas the Republicans nominated Governor William McKinley of Ohio. In contrast to previous Democratic nominees, Bryan followed a platform aligned with contemporary liberalism. Some of the main components of Bryan’s platform included increased federal aid to farmers and factory workers, opposition to the gold standard, a federal income tax, opposition to the wealthy elite, and economic populism. In contrast, Republican William McKinley took an entirely opposite position, arguing that the application of classically liberal economic policies, the continuation of the gold standard, and protectionism would lead to widespread prosperity. Ultimately, McKinley defeated Bryan by a comfortable margin, but the political shifts from this election would have ramifications moving forward. Even though the Republican Party moved towards the left-wing of the political spectrum once more under the Presidencies of Theodore Roosevelt and William Howard Taft, the conservative branch would win out by 1920 with the nomination and subsequent election of Warren Harding to the Presidency.
A Party in Decline & Flux
Senator Robert Taft of Ohio led the conservative wing of the Republican Party from the late 1930s to the early 1950s and advocated for the party to support fiscally conservative principles.
The initial era of Republican domination at the Presidential level would come to an end with the start of the Great Depression in 1929. President Hoover attempted to alleviate the widespread suffering caused by the Depression, but his strict adherence to Republican principles precluded him from establishing relief directly from the federal government. Additionally, President Hoover became the first Republican President to openly-endorse white supremacy and supported the removal of blacks from state-level Republican parties, which alienated black support for the Republican Party. The Depression cost Hoover the presidency with the 1932 landslide election of Franklin D. Roosevelt and allowed the Democrats to gain a substantial Congressional majority for the first time since the 1850s. The Roosevelt Administration implemented a legislative program known as the “New Deal,” which expanded the role of the federal government in the economy as a way to alleviate the suffering caused by the economic decline and to prevent another economic decline on the scale of the Great Depression from occurring again. Additionally, President Roosevelt sought to gain the support of voter groups that typically voted Republican such as African-Americans, ethnic minorities, and rural farmers. Roosevelt’s efforts were ultimately successful and led to strong victories for the Democratic Party at the ballot box for the next three decades. During this period, the Democratic Party retained control of Congress for every year except 1946 and 1952 and won the Presidency in all elections except 1952 and 1956, when Dwight Eisenhower, a liberal Republican, defeated a fractured Democratic Party.
In response to the New Deal and the policies of the national Democratic Party, the Republicans split into two factions. The first wing was the liberal faction, which favored expanding the New Deal social programs, but felt that such programs would be managed better by Republican administrations. Additionally, the liberal faction of the Republican Party firmly favored civil rights legislation and worked closely with Northern Democrats to push forward positive legislative changes in that arena. The other group was the conservative faction, which advocated a return to laissez-faire economics and fiscal conservatism. Even though the conservative faction of the Republican Party also supported civil rights reforms, they started to form alliances with conservative Southern Democrats in the late 1930s as a way to prevent progressive laws from passing. After the 1938 midterm election, the “Conservative Coalition” formed a majority in Congress and prevented successive Democratic administrations from expanding the New Deal and other associated social programs. It can be argued that the “Conservative Coalition” controlled Congress until 1958, when a large group of liberal Democrats was elected to the Senate and House of Representatives.
The Southern Strategy & The Republican Resurgence
The political parties began to shift again in the 1960s due to policy changes within the Democratic Party. The main split in the Democratic Party came about due to the struggle for civil rights. Since the late 1930s, the Democratic Party experienced a major split between the liberal and moderate factions, which favored civil rights, and the Southern faction, which was steadfast in its opposition to federal civil rights legislation. These tensions came to a head when Lyndon Johnson became President after John F. Kennedy was assassinated in 1963. Despite being a Southerner, Johnson had a record in support of civil rights since the mid-1950s and felt that civil rights represented a major political opportunity for the Democratic Party. Over the course of his Presidency, major civil rights legislation was passed in 1964, 1965, and 1968 and the Democrats soon became associated with civil rights reform. In response to these changes, the Republican Party began to appeal to white Southerners opposed to the changes to their way of life. These appeals first became apparent in the 1962 Alabama Senate Election between Democrat Lister Hill and Republican James Martin. Despite being a supporter of segregation, Hill was targeted relentlessly by Martin as a covert supporter of federal civil rights legislation. Ultimately Hill won the race, but by only a 1% margin. The Hill-Martin Senate race served as a prelude to the 1964 Presidential Election, in which Republican Barry Goldwater lost in every region of the country except the Deep South due to his opposition to the Civil Rights Act of 1964.
Modern Republicans look up to President Ronald Reagan (1981-89) as the main political leader to emulate.
The Republican Party began to see a resurgence at the federal level during the late 1960s that continue to this day. As a result of the aforementioned civil rights reform, the ongoing Vietnam War, and the failure of the Democratic Party leadership to reform the party structure, the Republican Party regained control of the Presidency in 1968 and retained control of this office in each election except 1976, 1992, 1996, 2008, and 2012. On the other hand, the Republican Party did not regain control of the Senate until 1980 and the House of Representatives until 1994. The growth of the Republican Party over the past 50 years can be attributed to the implementation of a conservative platform on both economics and foreign policy as well as the rise of the Christian Right political movement in the late 1970s. The modern Republican Party considers President Ronald Reagan (1981-89) as the political leader to look up to, much like how Democrats view Franklin Roosevelt as their political idol. During his Presidency, Reagan implemented neoliberal economic policies, expressed strong support for socially conservative values, increased defense spending and advocated an internationalist foreign policy that some credit with contributing to the end the Cold War.
Contemporary Republican Party
Today, the Republican Party is at its highest level of support since the late 1920s. The Republicans control both House of Congress and have gained total control over historically Democratic areas such as the Appalachian and Ozark regions of the South since 2010 and are increasingly becoming dominant in the industrial Midwest. On the other hand, the Republican Party has lost nearly all of their historic support in the Northeast and West Coast due to their adopting of a socially conservative and xenophobic platform over the past decade.
In the 2016 Presidential Election, Republican Donald Trump defeated Democrat Hillary Clinton with 304 Electoral Votes but lost the popular vote by 3 million. Trump performed strongly in the Midwest, Appalachia, Ozarks, and some states in the Northeast such as Maine, Rhode Island, and New Hampshire. Additionally, Trump performed very poorly in several typically Republican states such as Texas, Georgia, Arizona, North Carolina, and Utah. Perhaps the 2016 Presidential Election signals a new realignment for both political parties. Future elections may see the Republican Party cementing their gains in the Midwest, Appalachia, and Ozarks, and the Democratic Party continuing to grow in support along both coasts of the US and picking up parts of the cosmopolitan Southern states and the Southwest.
In the article “The political economy of democratic transitions,” Stephen Haggard and Robert Kaufman explore the effects of socioeconomic factors on democracy. Since the early 1970s, articles by Dankwart Rustow on democratic transitions have been reference consistently by experts. Rustow analyzed the socioeconomic, political, and psychological prerequisites of democracy. Democratization is the result of regime change, among numerous other factors. Most contemporary theories of democratization do not specify the resources that contending parties bring to negotiation and do not consider what is at stake for those involved. In contrast, the approach by Kaufman and Haggard examines the leverage of incumbents against the opposition. Additionally, they look at ten middle-income countries in Latin America and Asia to better explain where democracy came from.
Stephen Haggard and Robert Kaufman start in the 1970s. Guillermo O’Donnell argued that economic changes create issues and incentives for militaries and individuals to abandon democracy and turn to authoritarianism. Additionally, Juan Linz and Alfred Stepan (other theorists) instead argued that electoral institutions increased polarization (such as the recent Clinton-Trump Presidential divide). Both Linz and Stephan argue that polarization is a reflection of a failure of democratic leadership.
The collapse of authoritarian regimes in Southern Europe and Latin America during the 1970s and 1980s increased interest in democratic transitions. During this period, politicians were influenced by Rustow’s emphasis on strategic interaction and negotiation. For example, after the Cold War, a number of new democracies throughout Europe due to these strategic negotiations.
The approach by Stephen Haggard and Robert Kaufman focuses on the effects of economic circumstances on the preferences, resources, and strategies of the most important political actors in democratic transitions. In addition, they recognize that many factors contributed to the democratic transformations of the 1980s and 1990s such as diplomatic pressures, structural changes associated with long-term economic development, and the spread of democratization within neighboring countries Moreover, Haggard and Kaufman argue that there is no relationship between regime change and economic crises.
Stephen Haggard and Robert Kaufman go over the responses to the economic crises by authoritarian regimes. The financial crises of the 1970s and 1980s were far reaching and cut across all social classes, necessitating policy reform. Kaufman and Haggard argue that poor economic performance reduces the power of authoritarian leaders. Economic declines such as the 2008 Great Recession alter the status quo between governments and the private sector. Cooperation between private sector business groups and authoritarian rulers is crucial for the stability of authoritarian rule. If the private sector loses confidence in the ability of the government to manage the economy, businesses begin supporting opposition groups. In contrast, even though authoritarian regimes may decline in periods of weaker economic growth, they have greater power in a stronger economy because of public dissatisfaction.
Stephen Haggard and Robert Kaufman go on to further support their arguments by comparing transitions from military rule in ten different countries. The six crisis transitions the look at include Argentina, Bolivia, Uruguay, the Philippines, Brazil, and Peru. The regime transitions in Argentina, Bolivia, Uruguay, and the Philippines occurred during economic downturns. Even though the transition in Brazil occurred during economic recovery, it experienced severe economic shocks several years earlier and still continued to face a series of unresolved adjustment challenges at the time of their respective transitions. The four non-crisis transitions they examine are Chile, South Korea, Thailand, and Turkey. The authoritarian governments in these transitions withdrew due to a variety of international and domestic political pressures. Additionally, the transitions in each country occurred against the backdrop of strong economic growth and economic stability. These conditions help to account for variations in the terms of the transition and the political alignments that emerged under new democratic regime.
The first area that Stephen Haggard and Robert Kaufman look at is the terms of the transitions in both the crisis and non-crisis scenarios. One area in which the differences between the crisis and non-crisis cases exists is through the processes through which constitutional orders were written and implemented. In Chile, Turkey, and Thailand, the transitions occurred under constitutions drafted by the outgoing authoritarian government. Even though incoming opposition political leaders succeeded in including some amendments, these constitutions provided the framework in which new democratic governments operated. On the other hand, opposition forces held much greater influence during crisis transitions. Their influence was particularly strong in the Philippines and Argentina. In such cases, opposition political leaders made choices with little input from the outgoing government and returned to the constitutions in effect prior to authoritarian rule. The relative strength of authoritarian and opposition forces in the negotiation process also influenced governmental design. The two objectives of outgoing authoritarian rulers were to preserve the military’s organizational autonomy and to impose limits on the opposition.
Stephen Haggard and Robert Kaufman then go over the fact that outgoing authoritarian political leaders often create authoritarian enclaves in the noncrisis transitions. The main authoritarian enclave set up by the outgoing authoritarian rulers was the military. For example, Thailand’s military continued to be a dominant force in its political system despite the country’s transition towards democracy and Pinochet remained as the commander of the Chilean military after he stepped down from power in 1990. Additionally, civilian oversight of the Turkish army remained limited after its transition to democracy in 1983. On the other hand, economic difficulties and loss of support prevented outgoing leaders from preserving either military prerogatives or other means of political influence in the crisis scenario. In the case of the Philippines, the military provided crucial support for the democratic transition and thus had considerable support within the new democratic government. Additionally, the Brazilian military retained the most extensive institutional rights of any military among the crisis transitions but left office constrained by deep internal divisions and a decline in support among both politicians and the general public. As a result, its influence on the new Brazilian constitution is relatively limited when compared to a number of non-crisis transitions such as Chile and Turkey.
Restrictions on political participation is another way in which both the non-crisis and crisis scenarios vary. In the non-crisis transitions, mechanisms of exclusion range from bans on political activity and outright repression to subtle manipulation of electoral laws. Exclusionary mechanisms were most visible in Turkey. For example, the government used legal restrictions on Islamic fundamentalism to clamp down on press freedom. The main labor confederation also remained banned after the transition in 1983 and the government sought to persecute union activists. Moreover, the Turkish military also banned numerous political organizations. On the other hand, the elimination of restrictions on labor and political groups was much more evident in the crisis cases. For example, labor unions regained the right to organize, strike, and press their political demands in countries such as Bolivia and many of the countries characterized by crisis transitions implemented open electoral laws that resulted in the development of strong multi-party political systems.
Stephen Haggard and Robert Kaufman also explore the political economy of new democracies. Even though both Haggard and Kaufman reject the notion that social interests determine the prospects for democracy, they recognize that the opportunities for political elites to mobilize support is dependent on how economic policy affects the distribution of income across different social groups. The first important factor that Haggard and Kaufman note is that the economic legacy of authoritarian rule determines the policy agenda of democratic successors. New democratic governments that come to power in the wake of crises confront a difficult set of economic policy choices. New democratic leaders can often trade political gains for short-run economic losses, but the transition itself raises expectations that government will respond to new political challenges. Additionally, policy reform is difficult because economic problems are pressing and demands for short-term economic relief are widespread. Economic evidence from middle income developing countries provides broad support for these expectations. For example, average budget deficits were almost twice the level of the pre-transition period, whereas in the noncrisis cases deficits remained low. Moreover, four of the crisis cases (Brazil, Argentina, Bolivia, and Peru) experienced hyperinflation during their first democratic governments.
In the noncrisis transitions, new democratic governments faced a different agenda of policy reforms. Even though economic reform was less pressing, even the most economically successful authoritarian governments were faced with societal issues that could erupt under democratic rule. Among the noncrisis transitions, the consequences of a large social deficit were most evident in Turkey, where inequality grew steadily during the 1980s. Despite such challenges, many of the countries that experienced non-crisis transitions made headway. For example, Chile’s democratic government had some success in reducing poverty and allowing for increased economic equality while maintaining strong economic growth throughout the 1990s. On the other hand, the continuing power of interests linked to the old regime placed limits on the extent to which the new democratic governments could adequately address the economic demands of previously excluded social groups.
Stephen Haggard and Robert Kaufman also argue that the transition paths also affect the evolution of the political institutions by which economic demands and policy dilemmas are addressed. In the non-crisis cases, new democratic governments often had to deal with the persistence of nondemocratic enclaves, the autonomy of the military establishment, and links between political groups and business elites. Efforts to address political legacies risked to unravel the democratic bargain and make the respective societies more at risk to return to authoritarianism. On the other hand, the crisis cases exhibited a different set of institutional dilemmas. The overall economic circumstances encouraged executives to concentrate their authority. Such a pattern has been evident where economic issues require complex stabilization packages. Divergent forces within the party system also increased the difficulty of sustaining support and strengthened the incentives for executives to govern in an autocratic manner. Democratic institutions may also be undermined by a failure to take swift and effective action in the cases of severe economic crises. However, the absence of institutionalized consultation with legislators and interest groups deprives executives of needed feedback that may be essential to correct past policy errors.
In conclusion, Stephen Haggard and Robert Kaufman explore the impact of economic crises on democratic transitions in “The political economy of democratic transitions.” Their case study includes several different countries from Latin America and Asia and focuses on factors such as economic performance and the types of transitions towards democracy in each country. Through their study of the experiences of each country, Haggard and Kaufman conclude that economic policy and performance serves as a way to influence both transitions towards democracy and the future success of newly established democracies.
One of the most significant political theories of the 20th Century is Ayn Rands Objectivism. Rand is known for promoting the philosophical idea of objectivism. She defines objectivism as a philosophy that emphasizes personal freedom, individuality, and rational egoism. Her anthology of fiction books describes the political theory of Objectivism through the actions and speeches of the main characters. Her additional non-fiction works continue to explore that political and social philosophy. Rand was influenced by a number of theorists such as Aristotle and writers including Victor Hugo and Edmond Rostand. Objectivism is a controversial political theory and has been criticized by academic philosophers due to its view on the role of government and human nature. On the other hand, the popularity of Rand’s work continues to grow and has an influence on political thought to this very day.
Rand was born as Alissa Rosenbaum in 1905 in St. Petersburg to a middle-class Jewish family. From a young age, she expressed great ambition and an interest in pursuing a career in writing. A singular event that occurred in her early years was the 1917 Russian Revolution, in which the country transitioned almost immediately from a monarchy into a Communist state. She had numerous experiences in Soviet Russia that helped to mold her sociopolitical beliefs. For example, the nationalization of her father’s chemistry shop transitioned her family from relative affluence to poverty. Despite the loss of her family’s assets under the Soviet regime, she was able to attend university and graduate with a degree in history. Changing her name from Alissa Rosenbaum to Ayn Rand, she left the Soviet Union for the United States in 1926 to pursue her dream of becoming a screenwriter. Over the succeeding years, Rand found success first as a screenwriter, and eventually as a playwright and author.
Ayn Rand c. 1930s
An important factor that influenced Rand’s writings over the course of her life was her personal experience in numerous political eras. From monarchy in Russia, to the transition to the Soviet Union, to Great Depression era America, her youth was characterized by many stark contrasts in political and economic systems. Rand’s writings against communism were influenced by what she observed and she wrote numerous works outlining Objectivist theory throughout World War II and the early Cold War era. In response to the Cold War and the threat of Communism spreading worldwide, Rand cautioned against the belief of collectivism in books such as The Fountainhead and Atlas Shrugged. Both The Fountainhead and Atlas Shrugged are fictional works that promote the belief in personal freedom and rationality, and speak out against the spread of Communism and Socialism.
Ayn Rand personally cites Aristotle as one of her primary influences. Aristotle was a Greek logician, philosopher, and scientist as well as one of the founders of western political theory. Rand explains, “it is not the special sciences that teach man to think; it is philosophy that lays down the epistemological criteria of all special sciences.” Just as Ayn Rand believed that science was one of the most important values of society, Aristotle argued that politics is the master science because mankind is a political animal. As Aristotle believed in “biology expressed in the naturalism of politics,” his concept of morality and the world aligned with Rand’s concepts of philosophy and politics being inextricably tied to science. Similarly, Aristotle argued that mankind engaged in politics through all of its actions. Rand believed that each person acts as an individual to create the political society that exists. If each individual acts according to the principles and morals of Objectivism, such as those of rational thought and the execution of free will, sociopolitical order will naturally emerge. Aristotle contends that politics is the study of values, ethics, what is right and wrong, what should be, and what could be.
Despite the fact that Rand cited Aristotle as one of her primary influences, their views on the ideal form of government were dissimilar. For example, Aristotle viewed democracy as flawed because it resulted in competition between social classes and felt that the proper form of government consisted of its leaders governing with the common interest of all its people in mind as opposed to governing based on individual interests. Additionally, Aristotle felt that a key role of the government would be to provide for and promote the public good and explored the idea of the organic theory of the state throughout his works. The organic theory of the state theory stipulates that the power and authority of the state transcends the power of the individual. On the contrary, Rand believed that the role of government would be limited to protecting individual rights and serving as an agent for people’s self-defense. A government that promoted the opposite values, according to Rand, has no justification and is the primary threat to the structure and nature of human society.
One of the major values of Objectivism is a belief in rational egoism. Objectivism believes in the “concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute.” With this, Ayn Rand is saying there is no more important moral goal in Objectivism than that of achieving happiness. Achieving happiness, according to Objectivists, requires rational respect for the facts of reality, including those regarding human nature and our own needs. In order to achieve such goals, Rand argues that people must behave in a way that conforms to “rational egoism,” in which the promotion of one’s self-interest is in accordance with that of reason. Rand further promotes the logic of this theory in The Virtues of Selfishness. Rand argues that selfishness is a proper value to pursue and rejects the idea of altruism, the belief that self-sacrifice is a moral ideal to pursue. Additionally, Rand rejects the idea of “selfless selfishness” of irrationally acting individuals and instead argues that to be ethically selfish entails a commitment to reason rather than to emotionally driven whims and instincts.
In addition, Objectivism promotes a unique view on the nature of reality and views knowledge and reason as important aspects in society. Objectivism holds that “reality exists as an objective absolute—facts are facts, independent of man’s feelings, wishes, hopes or fears.” Rand’s Objectivism begins with three self-evident concepts: existence, consciousness, and identity. All three truths are interconnected and exist simultaneously. Ayn Rand goes on to further explain that anything that is metaphysically given is absolute and cannot be changed. Objectivism holds that all knowledge is reached through reason, the “faculty that identifies and integrates the material provided by man’s senses.” This view of reason in an Objectivist society was further exhibited by the main characters and themes in Rand’s 1957 novel Atlas Shrugged. The work dramatizes the idea that the reasoning mind is the basic source of the values on which human life depends.
Furthermore, Rand supported a belief in secularism through Objectivism and also promoted a distinct purpose of morality. Objectivism is a purely secular ideology that views the role of religion as having a negative influence on reason and capitalism. The purpose of morality under Objectivist thought is to allow people to enjoy their own lives. This belief is further exemplified by John Galt, the embodiment of Objectivism in Rand’s Atlas Shrugged, when he said, “The purpose of morality is to teach you, not to suffer and die, but to enjoy yourself and live.” Rand felt that religion is an “ideology that opposes man’s enjoyment of his life on earth” and thus, in violation of the key principles expressed though Objectivism. Objectivism rejects both mysticism (the idea that knowledge can be acquired through non-rational means) and skepticism (the belief that knowledge is impossible and cannot be acquired by any means). Objectivism also teaches us that a harmony of interests exists among rational individuals, so that no one’s benefit will come at the expense of another’s. As such, a life of mutual respect and benevolent independence is possible through Objectivism.
Objectivism includes several suggestions as to what constitutes a proper society. One such element is the support for individual rights and freedom from coercion. The ethics of Objectivism hold that each person can live and flourish through the free exercise of his or her rational mind. Unless faced with threats of coercion or force, it is essential for people to exercise their own free will. The threat of force makes people accept someone else’s dictates, rather than follow their own judgment. Rand argues that certain societies, such as that of the Soviet Union, and certain ideologies, such as communism, are doomed to failure due to the lack of individual rights and the use of coercion to limit freedoms. Rand further argues that “freedom, in a political context, has only one meaning: the absence of physical coercion” and that societies must secure the principle that no one has the right to use physical force or coercion against any other.
In “Capitalism: An Unknown Ideal,” Rand states, “government is the most dangerous threat to man’s rights: it holds a legal monopoly on the use of physical force against legally disarmed victims.” Objectivism calls for a limited form of government and promotes the belief that an excessive government is a threat to individual freedom. Additionally, Rand argues that the government also has a role in defending its people from foreign enemies, providing a system for arbitration of disputes, and developing a system for enforcement of the law. Objectivism also argues that the main source of government power comes from “the consent of the governed,” which means that the only rights that the government has are delegated to it by the citizens for a specific purpose.
Objectivism considers Capitalism to be a proper political economy. Rand considered capitalism in its purest form to be a social system characterized by individual freedom and diversity. Additionally, she felt that Capitalism was an egalitarian system that treated all people as individuals with no regard to ethnic, religious, or other collective principles enshrined by law. Moreover, Objectivism, like Capitalism, is a social system based on the recognition of individual private property rights. Objectivism expresses the belief that respect for property rights is key in the development of a capitalist economic system and as a way to ensure the upholding of individual rights and economic freedoms. Property rights are important to Objectivists because they ensure that people can keep what they earn. As Objectivism emphasizes production and creation, the property acquired through hard work is the most essential representation of the exercise of free will. Rand states that, “without property rights, there is no way to solve or to avoid a hopeless chaos of clashing views, interests, demands, desires, and whims.”
Not everyone, however, is fully receptive to Rand’s ideas on morality. While she does have a large following, there are numerous critics of her somewhat rigid interpretation of social values. One of the main points of criticism is her influence as a moral and political philosopher. For example, it has been claimed that the ideas expressed by Rand throughout her works are not important in the realm of philosophy and did not constitute and groundbreaking ideas. Furthermore, Rand’s view on ethics is also criticized, in particular, her defense of the morality of selfishness. The view on politics that Rand expressed in Objectivist theory is also criticized by some of ignoring the central role that government often plays in society.
In conclusion, Ayn Rand is one of the most influential political theorists of the 20th Century. Rand is known for developing the philosophy of Objectivism, which promotes the ideals of rational egoism, individual liberty, reason and knowledge, and secular values. Rand has expressed the idea of Objectivism through numerous writings, in fiction and non-fiction alike. Moreover, Rand’s views on sociopolitical issues were influenced by past experiences growing up in Soviet Russia and her early adult years in Depression-era America. Rand’s political philosophy still remains significant to this very day and her works continue to retain mainstream popularity.
Sources:
Ayn Rand , “Introducing Objectivism,” The Objectivist Newsletter Vol. 1 No. 8, August 1962, p. 35
Ayn Rand “Faith and Force: The Destroyers of the Modern World,” in Philosophy, Who Needs It? p. 62.
Bell-Villad, Gene H. “Who Was Ayn Rand?” Salmagundi 141/142 (n.d.): 227-42.
Miller, Fred. “Aristotle’s Political Theory.” Stanford University. 1998. Accessed February 24, 2016.
Biddle, Craig. “Atlas Shrugged and Ayn Rand’s Morality of Egoism.” The Objective Standard 7, no. 2 (Summer 2012).
Throughout the 2003 book FDR’s Folly: How Roosevelt and His New Deal Prolonged the Great Depression, Jim Powell argues that the policies of U.S. President Franklin Roosevelt and the New Deal did little to restore the American economy during the height of the Great Depression and that they only contributed to the stagnant economic situation and high rate of unemployment. In addition, he argues that the New Deal necessitated a heightened level of government intervention in the economy through the establishment of a myriad of regulations in nearly every aspect of economic life. To back up his argument, Powell examines the long-term effects of the New Deal and analyzes President Roosevelt’s policies in order to assert that they had an adverse impact on the economy overall. In the introduction, Powell attempts to clarify what went wrong during the Great Depression, declaring that it would have been “avoidable” with better governmental policies. He determines that “chronic unemployment persisted during the 1930s because of a succession of misguided New Deal policies.”
Overall, Powell’s assessment of President Roosevelt’s economic policies represents a new interpretation of U.S. economic history. The conventional belief among historians is that the New Deal reforms ultimately saved the U.S. economy from ruin and that the Great Depression was primarily caused by the lack of government regulation in the economy. For example, in the introduction to “The Great Depression: America 1929-1941,” historian Robert McElvaine argues that the Great Depression was caused primarily by the lack of government regulation and oversight in the economy, further stating that the policies of the New Deal ultimately succeeded in their goal to prevent another economic collapse as severe as the Great Depression. Additionally, McElvaine argues that President Roosevelt was too cautious with spending on the New Deal and that increased spending would have made the New Deal programs more efficient. In contrast, Powell argues that the Great Depression was caused in part by changes in monetary policy by the Federal Reserve in 1929 and due to the Federal Reserve’s failure to adequately respond to the subsequent drop in consumer demand.
Powell mentions that President Roosevelt harmed the economy by increasing taxes during his term in office. To end the Great Depression and restore economic stability in the U.S., Roosevelt sought to increase government influence over the economy by requiring higher taxes. Initially, Roosevelt pushed for higher excise taxes on products such as tobacco, liquor, and gasoline during his first year in office, and further sought to increase income taxes beginning in his second year. The 1934 Revenue Act impacted higher-income individuals, through raising taxes on all incomes above $9,000 annually. Additionally, the Social Security Act of 1935 introduced the payroll tax, which increased the cost of hiring people and prolonged high unemployment. The implementation of a variety of tax increases by the Roosevelt administration reduced the spending power of both average and wealthy Americans and prolonged the difficult financial situation.
Powell argues that the New Deal resulted in increased costs for consumers through the enacting of numerous federal regulations. Powell cites the National Industrial Recovery Act (NIRA), which set up the National Recovery Administration (NRA), as an example of a New Deal program that established new economic regulations. The primary goal of the NRA was to bring business, labor and government together to create codes of fair practices and to fix prices to reduce competition from monopolies. The NRA also implemented regulations requiring businesses to reduce output and keep established prices to increase the wages of their employees. In reality, the policies of the NRA increased the cost of consumer goods and did little to cure persistent unemployment. Additionally, the NRA created government-sanctioned cartels between industries through the establishment of uniform codes businesses had to follow. Ultimately, the NRA was struck down as unconstitutional by the Supreme Court in 1935. After the NIRA had been overturned, economists declared that “the NRA on the whole retarded recovery” by increasing regulations on businesses and raising the costs of consumer goods.
Powell then goes on to explore the economic effects of the public works program established through the New Deal such as the Public Works Administration (PWA), which was established to construct complex and large-scale public works projects such as highways, bridges, and dams. As a result, most PWA projects tended to employ skilled workers as opposed to poorer and unskilled workers affected most by the Great Depression. Much of the money allotted for relief and public works programs were also used to promote favoritism and patronage towards supporters of the Democratic Party and President Roosevelt, thus encouraging corruption at the highest levels of government. For the Democratic Party to attract the loyalty and votes of states such as Nevada and Utah, Powell contends that the Western region benefitted most from the New Deal public works programs even though the area was affected less by the Great Depression than the South and larger urban centers in the Northeast.
Powell contends that the recovery from the 1937-38 Recession was worsened by the Fair Labor Standards Act, which specified a minimum wage of 25 cents per hour. The implementation of a minimum wage depressed the economy by increasing the cost of hiring new employees and necessitating an increase in wages that many employers could not afford. The minimum wage particularly impacted African American agricultural workers in the South. For example, the Labor Department reported in 1938 that some thirty to fifty thousand workers, primarily southern African Americans, lost their jobs within two weeks of the implementation of the Fair Labor Standards Act. As a result of the economic downturn in 1938, many Americans began to turn against the New Deal, and it increasingly looked like President Roosevelt did not have a clear economic policy.
Despite the factual basis of Powell’s argument, there are several instances of bias throughout the text. For example, Powell shows bias towards the economic belief that reducing taxes and government spending is the primary factor that leads to economic recovery. Powell exhibits this conviction in the final chapter when he is comparing the recovery from the Great Depression with recoveries from preceding economic downturns. Powell mentions that the reason the U.S. recovered from the 1837 Recession and the 1920 Recession was through reductions in government expenditures and taxes. However, his comparisons may not be entirely valid, as at the time such economic downturns took place, the U.S. economy lacked the 1930s-levels of industrialization and globalization.
Moreover, Powell at times criticized President Roosevelt in a way that lacks objectivity. For example, Powell compares Roosevelt’s actions regarding economic regulation to the actions of dictators such as Juan Peron and Mao Zedong. Additionally, Powell accuses some of the advisors to President Roosevelt as pushing for socialism through their support of progressive economic policies. Powell then implies that President Roosevelt’s advisors pursued economic policies based purely on a form of idealism that did not take into account the potential negative effects of government intervention in the economy. The chapter titles may also serve as an indicator of Powell’s own bias, as they are worded as questions asking the reader why a particular policy of President Roosevelt and the New Deal negatively impacted the economy.
To sum it up, Jim Powell argues that the New Deal programs and the economic policy of President Franklin Roosevelt ultimately failed to end the Great Depression and instead worsened the economic situation in the U.S. In order to back up his arguments, Powell cites examples of President Roosevelt’s economic policy such as the low effectiveness of the public works programs, tax policy changes during the 1930s, banking policy, and economic regulatory policy. Overall, Powell makes a compelling case against the New Deal through the factual basis of his opinions, though his own personal bias takes away from the central focus of his arguments at times throughout the text.
Throughout the 1980 book The Elusive Republic: Political Economy in Jeffersonian America, Drew McCoy attempts to explore the competing economic visions in the U.S. during the aftermath of the Revolutionary War and how different leaders such as Thomas Jefferson, James Madison, and Alexander Hamilton had conflicting ideas regarding what economic system would be the most suitable for the newly independent nation. Hamilton advocated a commercialized economy in which manufacturing was fundamental. On the other hand, Madison and Jefferson felt that an agrarian economy would be best for the U.S. and would ensure its success as a nation. McCoy explores the relationship between political economy and morality and how this definition shifted during early American history. Furthermore, McCoy argues that the economic visions of Thomas Jefferson and James Madison were short-lived and that several factors prevented them from becoming permanent.
In the first chapter, McCoy discusses the debate during the 18th Century over economics and morality and how they would later influence the founding fathers. By the mid-18th Century, Europe was undergoing a commercial and industrial revolution that led to profound changes in its economic conditions. In addition, the rise of industrialization raised many questions about its effect on society and helped to alter the opinion regarding luxury goods. Since the middle ages, luxury was considered to be a corrupting influence in society and a danger to public welfare. However, the 18th Century marked a transitional period in the perception of luxury goods. As a result of increased materialistic impulses, some began to redefine the meaning of luxury and explore the societal implications of the increased emphasis on luxury goods.
McCoy describes the reaction to the changes in the economy by philosophers during the 18th Century. A major critic of the new social order was Jean-Jacques Rousseau. Rousseau argued that the commercialization of society would have a harmful effect on society and would promote a multitude of artificial needs and desires in men, to which they would become enslaved. Furthermore, Rousseau felt that the drive for status and wealth would never fully satisfy individuals and that it would increase social inequalities. In contrast, David Hume defended the commercialization of society that came as a result of the industrial revolution. Hume argued that the advancement of commerce, mechanical arts, liberal arts, and fine arts were interdependent on one another. As a result of their interconnection, Hume argued that the advancement of commerce would be beneficial to society by establishing a more refined culture. The differences in opinion regarding the growth of commerce and its effects on society would soon influence the debate in post-Revolutionary America over which type of political economy would develop in the new country.
McCoy first discusses the economic ideas of Alexander Hamilton, who served as Treasury Secretary under George Washington. The political economy of Hamilton advocated an aggressive expansion of American commercial interests and the development of a strong manufacturing sector with the cooperation of a strong federal government. Hamilton’s economic plan called for a funding of the national debt and the incorporation of the Bank of the United States, which would help the new government establish its credit and encourage the investment of private capital in the development of a commercial sector. Hamilton viewed the development of commercial relations with Great Britain as a way to supply America with the capital and credit that could ignite the economic growth that he envisioned .
Additionally, Alexander Hamilton felt that a manufacturing economy was a sign of social progress and that the social inequalities resulting from it were inevitable. Proponents of the Hamiltonian system argued that a growing manufacturing sector would also increase individual liberty by giving people more freedom in choosing an occupation. Hamilton’s economic policy was further pushed forward by the Jay Treaty, signed between the U.S. and Great Britain in 1794. In addition to averting a major war between both countries, the Jay treaty opened up limited trade between the U.S. and several of Britain’s colonies. The resulting increase in foreign trade helped to fuel further the commercial revolution and made its eventual spread to the U.S. increasingly inevitable.
In contrast to Alexander Hamilton, James Madison advocated a political economy that focused on agriculture and the growth of a household goods industry as opposed to rapid commercialization. The main component of Madison’s political economy was westward expansion and national development across space rather than across time. By encouraging a spread across western lands, Madison argued that the U.S. would remain a nation of industrious farmers who could market their surplus crops overseas to purchase manufactured goods from Europe. As a result, America could remain a young and virtuous country and at the same time offer a market for advanced manufactured goods from Europe. Unlike Hamilton, Madison believed that the rise of industrialization in countries such as Great Britain was a sign of moral and societal decay. He concluded that Hamilton’s plan threatened to subvert the principles of republican government and would lead to the “Anglicization” of the American government.
McCoy then goes on to describe the political and economic aspirations of Thomas Jefferson after his election in 1800. Jefferson described his election as a return to the original values and ideals of America that were overturned and repudiated under Federalist rule. The main aspects of Jefferson’s political economy included his advocacy of western expansion as a way to encourage the continued strength of a primarily agrarian economy; a relatively liberal international commercial order to offer markets for American agricultural surplus; and a reduction in government spending and the national debt. Through such steps, Jefferson sought to evade the social corruption of an increasingly commercialized society and preserve the republican vision of American society. Jefferson’s political economy was enacted through the Louisiana Purchase of 1803. By purchasing the Louisiana territory from France, Jefferson hoped that the addition of new lands would preserve the agriculture-based U.S. economy and add to his notion of a continuously expanding “empire of liberty” across the western hemisphere.
McCoy main thesis in “The Elusive Republic” is that the political economy advocated by Thomas Jefferson and James Madison ultimately failed and was not realized in the long term. Overall, the basis of his argument is strong and is based on several key factors. The first two factors were the outbreak of the wars resulting from the French Revolution in 1792 and the signing of the Jay Treaty in 1794. Despite the widespread belief that European demand for American exports would decline as a result of the wars, it instead increased dramatically after 1792. McCoy argues that the wars resulting from the French Revolution marked a major turning point in the American economy because it made it profitable for Americans to export goods and materials to Europe. Additionally, the Jay Treaty helped to open the door to increased international trade and cemented America’s economic ties with Great Britain.
Furthermore, McCoy argues that the Louisiana Purchase augmented the spread of slavery and in turn, undermined the political economy of Jefferson and Madison. Despite the fact that the Louisiana Purchase removed several obstacles to the realization to Jefferson’s republican vision, it also exposed some of the contradictions within his vision. For example, the supporters of Jefferson frequently boasted of the isolation and independence of the U.S., but in reality American republicanism depended on both an open international commercial order and the absence of any competing presence in North America. The U.S., McCoy argues, could isolate itself from foreign influences only if it were to resign itself from international trade and westward expansion (204). In addition, the Louisiana Purchase fueled the spread of slavery as the U.S. expanded westward. The Jeffersonian political economy had hoped by the controlled exploitation of land would reduce the need for slavery and that it would eventually die out. In reality, the demand for slave labor increased dramatically as the agricultural industry expanded westward (252).
In conclusion, Drew McCoy explores the competing economic visions in early America in The Elusive Republic: Political Economy in Jeffersonian America. The major figures in the debate over political economy in America were Alexander Hamilton, James Madison, and Thomas Jefferson. Ultimately, the political economy of Jefferson and Madison did not come to define the U.S. in the long-term, and several diverse factors prevented it from becoming permanent. Furthermore, McCoy discusses the implications of the shift towards a highly commercialized economy and the changing moral beliefs regarding luxury goods throughout the 18th and early 19th Centuries.
One of the most important aspects of the debate over economic policy is the effectiveness of the Minimum Wage and the prospects for its increase. The ongoing debate over the minimum wage is an important facet of the country’s economic future and helps to determine its economic competitiveness. Proponents of the minimum wage increase argue that the benefits of having a higher rate outweigh the costs. Opponents of a higher minimum wage, on the other hand, argue that a higher minimum wage is, in fact, harmful to the economy overall. The objective of this report is to discuss the effects of the minimum wage and to analyze the respective positions of both sides of the argument.
The first federal minimum wage law in the United States came into effect in 1938, through the Fair Labor Standards Act, which set the minimum wage at a rate of $0.25 an hour (roughly $4.13 in today’s dollars). In addition, the Fair Labor Standards Act also banned the use of child labor and set the maximum workweek at 44 hours (Grossman). Over the ensuing years, the minimum wage has been gradually increased to different levels. The most recent increase occurred in 2009, when the federal minimum wage rose by about 10%, from $6.55 to $7.25. Over the last several months, there have been various proposals discussed that would boost the federal minimum wage once again. The most prominent proposal came from President Barack Obama. In his recent State of the Union Address, President Obama suggested a $10.10 federal minimum wage, which would amount to a 40% increase from its current level. The proposed increases in the minimum wage ignited a large number of discussions on both sides of the political spectrum, with Democrats favoring the increase and Republicans nearly universal in their skepticism of such a plan. Furthermore, most economists cannot reach a consensus regarding the effectiveness of such a move.
Proponents of an increase in the minimum wage argue that a higher wage would not have a huge effect on businesses and would not lead to an increase in prices of goods. According to recent data compiled by the Center for Economic and Policy Research (CEPR), there is no direct evidence to claim that an increase in the minimum wage would have an adverse impact on employment. That data contradicts the argument used by opponents of increasing the minimum wage that any increase would have a detrimental effect on employment and economic growth. Furthermore, the same research shows that a hike in the minimum wage would not have a huge impact on the prices of goods and services provided by companies. For example, assuming that the minimum wage is to be increased by 10% over a 2 year period, the prices of goods would only increase by roughly 0.18%. Those increases in prices are negligible when compared to the overall gains in purchasing power for many workers.
Another argument in favor of increasing the minimum wage is that an increase will help to reduce the poverty rate. For example, if the minimum wage was to be increased from $7.25 to $10.10, it is estimated that the number of people who live below the poverty line will reduce by about 4.6 Million. In addition, the average incomes of the bottom 10% of earners are expected to increase by $1,700 per year due to such a raise. The belief that an increase in the minimum wage can reduce poverty is shared by many economists, even those who are skeptical about the results of the minimum wage on businesses. For example, minimum wage opponent David Neumark wrote in 2011 that an increase in the minimum wage by 10% would reduce poverty among 21-44-year-olds by 2.9%.
Proponents of increasing the minimum wage argue that the current minimum wage is too small when compared to the overall cost of living. While the federal minimum wage is $7.25 and is as high as $8.00 in states such as California, the minimum wage is often not enough for people to keep up with the cost of living. A worker who works 40 hours per week at $7.25 an hour can expect to only earn $15,080 per year. In contrast, the federal poverty line for a two-person household is $15,130. According to a study by Amy Glasmeier, the cost of living in various cities ranges from $12-15 per hour in smaller cities and up to $20 per hour in larger cities. Often, people who earn the minimum wage have to rely on working multiple jobs in order to keep up with their financial demands and continue to scrape by on a meager lifestyle.
Another argument from proponents is that raising the minimum wage will help to reduce income inequality. For example, the income rates of the top 1% of earners rose by a whopping 275% between 1979 and 2007 while the bottom 20% only saw an 18% increase during that comparable period. If the minimum wage had kept up with the productivity increases during that time, it would be $21.72 today, according to research by the Center for Economic and Policy Research (CEPR). Over the last several decades, income inequality and class distinctions have become a major societal issue in the United States and the stagnation of the purchasing power of the minimum wage is partially to blame. According to data provided by the Economic Policy Institute, the federal minimum wage had reached a peak in overall purchasing power in 1968 and since has declined by close to 23% over the past four and a half decades.
Furthermore, it can be argued that a higher minimum wage can also help to reduce gender inequality. When considering who earns the minimum wage, women made up roughly 64% of overall minimum wage earners in 2012. In addition, the minimum wage for tipped workers is $2.13 per hour and women comprise approximately 72% of all tipped employees. Furthermore, women are disproportionately paid a lower wage than men. The economic inequality between men and women is a serious economic concern that the U.S. continues to face and could weaken the economic prospects of the country in the years to come. An increase in the minimum wage could have a positive effect on the economic prospects of women and decrease the inequalities regarding gender than many women face on a daily basis in the workplace.
In the debate over increasing the minimum wage, there are numerous economists who take the position that a hike in the minimum wage is, in fact, harmful to the economy and not beneficial to the very workers that it is intended to help. Opponents of increasing the minimum wage often argue that a higher minimum wage will have a drastic impact on the economy. Opponents often argue that a higher minimum wage will have an effect in reducing employment among low-skilled workers, create an undue burden on businesses, harm U.S. economic competitiveness and increase consumer debt.
One common argument among proponents of the minimum wage is that an increase in the minimum wage will help the poor. However, according to the American Enterprise Institute, an increase in the minimum wage will do little to help the poor improve their standard of living and will reduce employment levels among lower skilled workers. Research indicates that a 10 percent increase in the minimum wage can reduce employment among low-skilled workers by roughly one to three percent. The proposed 40 percent increase can have an even greater effect on employment. In addition, studies by the AEI show that nearly all minimum wage jobs are held by teenagers from middle-class backgrounds who seek part-time employment. Furthermore, additional analysis by the AEI shows that only 10 percent of minimum wage earners came from households below the poverty line in 2007.
Another argument that can be used against raising the minimum wage is that a higher minimum wage can have a negative impact on economic growth and competitiveness. Those who are skeptical to a hike in the minimum wage feel that the effects of a higher minimum wage are especially felt on those who are seeking employment in entry-level jobs. A recent study by the Congressional Budget Office speculated that if the minimum wage were to be increased to $10.10 per hour, a job loss of over half a million could potentially occur. That belief is further corroborated in a study by David Neumark. In his study, Neumark uses a panel approach analyzing data regarding its effects and found that a higher minimum wage, in fact, increases unemployment.
It can also be argued that a higher minimum wage can lead to companies deciding to outsource their jobs to areas with considerably lower labor costs. One of the major economic problems that the U.S. faces are the outsourcing of jobs to countries overseas with lower costs of labor and prevailing wages such as China, Mexico, Brazil, and India. One can draw a direct correlation between a higher minimum wage and the outsourcing of jobs. As businesses seek to expand their profits, a higher minimum wage can ultimately affect their profit margins. In order to make up for their loss in revenue, a business may decide to transfer most of their jobs to an area where the minimum wage is considerably less. The practice of outsourcing is a common practice by many major businesses and is a major factor in the loss of a competitive edge in many economic indices by the U.S.
Opponents of increasing the minimum wage also argue that a higher minimum wage will discourage people from finding work in the U.S. by limiting the negotiation power for higher wages by prospective employees. A major work ethic philosophy in the U.S. is that one should find work at a rate that the free market determines as fair for one’s skill level. Though there are mandates on business by government, such as a minimum wage, people often lack the bargaining power to negotiate a fair rate for their skills and are trapped at the lowest wage level. Due to their lack of negotiation powers, people often decide not to seek employment and in turn, increase their reliance on government assistance programs such as food stamps and various forms of welfare. With the current financial status of the U.S., further demands on its entitlement system can potentially have a devastating effect on its economic future in the years to come.
Proponents of increasing the minimum wage argue that a higher minimum wage will lead to higher economic growth and more consumer demand. While most evidence shows that a hike in the minimum wage can boost consumer spending in the short term, overall a minimum wage increase can lead to consumers taking on more debt on the purchase of durable goods. According to a paper by Daniel Aaronson and Eric French, most adult workers at the very bottom end of the wage scale spend an additional $700 per quarter in response to a $1 wage hike. Most of the additional spending is paid for through forms of credit. When factoring an increase in the minimum wage from $7.25 to $10.10, a worker in the bottom of the economic scale would spend an additional $1,995 per quarter on consumer goods, again mostly paid for by increasing their personal debt.
Through the analysis of both sides of the debate over the minimum wage, it can be concluded that a clear position regarding its results is not reachable. When going over the data gathered by economists over many decades, it seems that the minimum wage affects many groups in entirely different ways. The effects of the minimum wage tend to be negative, as a higher minimum wage can potentially reduce business profits and harm economic competitiveness. On the other hand, a higher minimum wage will provide a myriad of benefits to workers such as the ability to keep up with the ever-rising standard of living and allow for a reduction in economic inequality. With regards to the proposed legislation on increasing minimum wage to $10.10, a compromise position can be reached that can satisfy the demands of both employers and workers. An example of a compromise would be to increase the minimum wage to $10.10 at a more gradual rate. Furthermore, such a plan could also call for granting companies several incentives such as tax credits or a slight reduction in their income taxes if they hire more employees. A proposal such as that would reduce the potential adverse effects of a large minimum wage hike on business and also allow the workers at the bottom of the economic scale to have a chance to improve their standard of living.
In conclusion, the debate over the minimum wage is one of the more controversial economic debates in the U.S. today. Much like with other debates, the dispute over the minimum wage is split along political lines. Those in support of a higher minimum wage explain its merits and illustrate its positive results, while opponents of a higher minimum wage take the contrary position. In addition, proponents of both sides of the minimum wage debate take many different positions and go over numerous arguments to back up their respective beliefs. Furthermore, many economists have not reached a conclusion regarding the ultimate effect of the proposed minimum wage increase. As time goes on, the true effects of the minimum wage increase may become more apparent and a conclusion regarding the future of the wage can be reached.
A current economic issue facing the U.S. is the aftermath of the Subprime Mortgage Crisis. The Subprime Mortgage Crisis coincided with the late 2000s economic crisis and was characterized by a substantial decline in home prices, increases in the rate of foreclosure, and intervention by the federal government through the issuing of bailouts. The causes of the Subprime Mortgage Crisis are directly traced back to several factors. One such factor was the 1999 repeal of the Glass-Steagall Act, which separated commercial and investment banks. The repeal of Glass-Steagall encouraged banks to engage in higher risks to earn a larger return on their investments. Additionally, the Federal Reserve reduced interest rates to 1 percent after the early 2000s recession, thus encouraging investments in high-yield mortgage-backed securities instead of lower-yield government bonds.
Another factor behind the Subprime Mortgage Crisis was misguided intervention by the federal government in the housing market. For example, both the Reagan and Clinton administration sought to encourage higher levels of home ownership through the loosening of mortgage requirements for lower income borrowers through the reform of the Community Reinvestment Act (CRA). As originally established in 1977, the CRA mandated regulators to consider whether a bank was serving the needs of the community in which they operated. New regulations for the program implemented in 1982 and 1995 required banks required the use of flexible lending practices to address loan needs of low-income borrowers. The less stringent standards vastly encouraged speculation in the housing market, spurring a bubble in home prices.
Both the Democratic and Republican parties have proposed several ways to address the subprime mortgage issue. The Democratic party has offered to make it easier for families to refinance their mortgages and to provide tax credits to first-time homebuyers. The Democrats also proposed requiring financial institutions to provide relief to struggling homeowners. In contrast, Republicans argue that the best way to solve the subprime mortgage crisis is to establish a mortgage finance system based on free enterprise and one that promotes personal responsibility on the part of borrowers. Additionally, the Republicans feel that a reduction in federal involvement in the housing sector will be crucial to reducing fears on the part of borrowers.
The policy proposals by the Republican party make the most sense to address the subprime mortgage issue. A key factor discouraging recovery in the housing market is a lack of confidence. Through establishing a mortgage system that balances both regulation and competition, trust in the housing market will improve. Another reason confidence in the housing market remains weak is due to the bailouts by the federal government directed the largest financial institutions involved in the crisis. The Republican proposal for promoting personal responsibility on the part of borrowers will serve as a way to limit federal involvement in the housing market and prevent taxpayer-funded bailouts from being used in the future.
In conclusion, a major economic issue currently facing the U.S. is the aftermath of the Subprime Mortgage Crisis. The crisis came about through actions by the federal government and private sector. Both the Republican and Democratic parties have come up with their own sets of solutions to address the subprime crisis and restore confidence in the housing market. The debate over ways to address the aftermath of the subprime mortgage crisis will continue to define U.S. economic policy over the coming years.
