American Sauce: Maybe the economy's not so bad?
July 11th, 2011
03:41 PM ET
11 years ago

American Sauce: Maybe the economy's not so bad?

Capitol Hill (CNN) – Yes, unemployment is again on the rise and the June jobs report had all the strength of an ICU patient. Yes, economic stress is literally making people sick. But are things as grim as they feel?

Maybe not.

In this week's American Sauce podcast, we lay out the bad and the good, yes the good, of the economy. Listen here. Or keep reading for highlights.

The Good In The Economy

State and local taxes are going up, indicating income and spending are up. Overall, the Census Bureau says states and local government saw tax revenue jump 4.7 percent in the first three months of this year.

Even more of an exclamation point: Individual income tax revenue sprung up 11.9 percent over the year before.

And no, this is not attributed to states increasing tax rates. Texas and South Carolina, just to name two no-new-taxes states, saw tax revenue go up around 7 percent.

Gross Domestic Product has grown for the past seven quarters, starting in June 2009.

So, the economy has grown and not contracted for the past two years. Full disclosure: That positive news is overcast by the fact that much of that growth was lackluster.

Economists generally want to see 3.6 percent growth of GDP before they declare the economy is expanding and healthy. But only two of those quarters above (end of 2009, beginning 2010) hit that mark.

Still, after GDP plunged at the end of 2008 and into the start of 2009, the economy seems to have stabilized and is not tanking. Unfortunately, it is stable and stagnant. See this as a question of perspective; the glass may now be at least a quarter full.

Manufacturing is bubbling despite the earthquake and tsunami in Japan.

A key index indicates U.S. manufacturing has expanded for nearly two years. The Institute for Supply Management showed its index of manufacturing rise again in June. It has stayed at levels indicating expansion for the past 23 months.

This comes despite continued problems from the Japan earthquake and tsunami. The natural disasters have disrupted the world supply chain for parts and orders.

But U.S. manufacturing keeps humming along, including another increase in American car sales in June.

The economy may be transforming.

Ron Bancroft, an independent economic consultant in Portland, Maine, says the economy is shifting to more flexible work schedules, locations and skills.

"The good news about that is the younger generation coming into the workforce has all the tools to be flexible," he said.

Of course, that may not help experienced workers but the fact remains that businesses seem to be trending this way.

According to economic data-crunchers McKinsey and Company, 60 percent of businesses want flex workers. That includes telecommuters, part-time employees and flex-hour workers.

"Because many Americans are much less willing to move than they were ten or 20 years ago, we have pockets where we have significant unemployment problems," Bancroft said. "But there are places where there is tremendous opportunity still."

That brings us to bright spot number five.

Unemployment is down in most metropolitan areas. In some places, it's very low.

The Bureau of Labor Statistics reports that the unemployment rate went down in the majority of cities and their surrounding suburbs over the past year.

The agency's figures show 274 metropolitan areas out of a total 372 in the nation saw unemployment drop and the jobs situation improve from May 2010 to May 2011.

Some high-profile hotbeds of economic woes saw big improvement: the unemployment rate in Las Vegas went down 2.5 percentage points, Detroit's dropped 1.8 percentage points and Flint, Michigan's declined 3.4 percentage points.

And some states and cities have tantalizingly fertile jobs conditions. Iowa is sitting with 5.6 percent unemployment. Boston is at 6.6 percent. The jobless rate in Mankato, Minnesota of Little House on the Prairie fame is at 5.1 percent. And North Dakota has a jaw-dropping rate of just 3 percent unemployment.

The Bad in the Economy

Long-term unemployment continues to set all-time records.

A whopping 1.9 million Americans have been looking for work for 99 weeks or more. And a staggering 700,000 of those have been looking for 152 weeks – or three years – according to unpublished data from the Bureau of Labor Statistics obtained by CNN.

Large-scale layoffs may have halted, but massive hiring has yet to begin. Those who lost their jobs in the meantime, are stuck in between.

To hear from a man who's been looking for work nearly two years, listen to our podcast here.

Housing prices are still dismal.

The sector that sparked this economic mess remains weak and messy.

A CNN survey of 27 leading economists predicts that housing prices are on pace to drop 2.9 percent this year.

The latest data, the Case Schiller housing price index from April, shows a slight increase in prices that month. That survey showed prices were up 0.7 percent from March to April. However, April regularly produced higher home prices. And the increase this year was less than average.

Oil prices flirting around $100 a barrel again.

Crude prices are back up in the red zone, despite decisions by many world powers, including the United States, to release millions of barrels from their strategic oil reserves.

People aren't spending as much.

Retail sales inched down in May, by 0.2 percent. This was barely a decline, but stood out because it was the first drop in retail sales numbers in 11 months.

And they're less and less confident.

Consumer confidence is down and falling, no matter how you look at it.

The Consumer Board's consumer confidence index dropped in May and June. And surveys show fewer people are optimistic about the economy turning around in the next six months.

Less confidence generally leads to lower spending and therefore less economic growth.

For more on the good and bad in the economy, listen to this week's American Sauce podcast.

Comment below.

Follow Lisa Desjardins on Twitter: @LisaDCNN

You can also listen to American Sauce on iTunes, Stitcher or subscribe to the podcast via RSS


Filed under: American Sauce • Economy • unemployment
soundoff (27 Responses)
  1. lynn

    Follow the thread. If companies hired more workers, they would make less profit. Why would they do that to themselves, just make those still with the company work longer hours. Perfect solution, less overhead, less benefits to cover and employees working like slaves afraid of losing their jobs too. Win-win for boss.

    July 11, 2011 03:50 pm at 3:50 pm |
  2. Annie, Atlanta

    The economy is horrible, unless you're in that class that our elected representatives protect. If you're wealthy, life has never been so good. When are we going to learn that we can't send millionaires to Congress? When are we going to learn that it's not just the other guy's representatives, but ours as well, that are the cause of the problems? When will Congress look out for us "little people?" When we stop sending millionaires to congress, that's when.

    July 11, 2011 03:51 pm at 3:51 pm |
  3. NC Independent

    According to Republicans the sky is falling.

    July 11, 2011 03:54 pm at 3:54 pm |
  4. Tim

    I tend to agree with the article. I was displaced in July 2009 and was unemployed for 14 months. Found work and now making more $$ than I ever did. I know several people that found themselves in the same boat and are now doing quite well. What happened? Flex schedules. Flexible work times. Bad part? Poor benefits.

    July 11, 2011 03:55 pm at 3:55 pm |
  5. terry,va

    What kind of sauce is CNN's Lisa Desjardins on? She has to be drunk from Obummie's kool-aid. That figures as the CNN political section has acontribute to Obummie's campaign and Obummie's poltical links on it.

    Here are the facts: 1 Unemployment up 135% to 9.2% since Obummie took office.
    2 Housing market worse than the great depression.
    3 Gas prices up over 100% since Obummie took office.
    4 The nation more divided as it has been since the civil war because of Obummie's policies.

    CNN you are in the tank for the worthless Obummie. Betcha the CNN censors don't print this !!!

    July 11, 2011 03:58 pm at 3:58 pm |
  6. Rudy NYC

    The economy has its' good points and its' bad points. Housing prices are still in a major correction. Prices were inflated way over their values because banks saw profit in higher priced mortgages.
    Our manufacturing has gone overseas because of tax cut incentives. US companies can deduct foreign taxes off of their US taxes. Nice!
    Our old economy is gone the way of the dinosaur and we need to find new industries to make up for it. Otherwise, we are toast. What we have now is the new normal. Thanks a lot to you know who you are.

    July 11, 2011 04:02 pm at 4:02 pm |
  7. Bill from GA

    The economy really took off after the Stimulus kicked in, but since the dems lost their Super-Majority and the repugs began to block the dems job-growth moves, the recovery has been lack-luster.

    The repugs have just one goal: Make Obama a one-term president. Even if they have to hold our growth hostage to do so.

    July 11, 2011 04:04 pm at 4:04 pm |
  8. Four and The Door

    And no, this is not attributed to states increasing tax rates. Texas and South Carolina, just to name two no-new-taxes states, saw tax revenue go up around 7 percent.
    _______________________________________________________________________________________________
    These are 2 states that do not tax companies into submission. How about that? Maybe there IS something to this whole Republican, " Let the Private Sector" grow the economy thing. ( Yeah, there is, actually )

    July 11, 2011 04:06 pm at 4:06 pm |
  9. Sniffit

    "But are things as grim as they feel? Maybe not."

    Don't let the giant corporations buying your advertising time hear you say that, CNN.

    July 11, 2011 04:07 pm at 4:07 pm |
  10. Rudy NYC

    One reason oil is high is because of demand. China's consumption has tripled in the past decade. India is not too far behind. That is a major part of why prices are so high. They also hit this mark during the final year of GWB. Prices dropped when Obama was elected with promises of clean energy solutions, which caused prices to drop. Green programs were cut and the price has gone back up. This pattern has repeated itself several times. When we spend money on alternative sources, the price of oil drops. Cut the programs and the price goes back up.

    July 11, 2011 04:07 pm at 4:07 pm |
  11. sonny chapman

    The future of a Repub. victory in 2012 depends on the Middle Class feeling that things are bad. Don't put out these kind of articles !

    July 11, 2011 04:08 pm at 4:08 pm |
  12. GI Joe

    The "ever negative" forget that 91% of the people in this country DO have jobs.

    I know a lot of republicans that file for unemployment because they don't want to work for minimum wage or slightly above. "They are too good to waste their time - they'll wait for something that pays more".

    July 11, 2011 04:08 pm at 4:08 pm |
  13. pc

    if americans could simply hear something positive going on in our government and less bickering and back biting from the dems and republicans we would all get a more pleasant feeling.we have one president and his name is barack obama, he was elected by the majority in this country to lead but since day one we have heard nothing but bashing and promises to make the president a one term president. for god's sake, america needs to come together as one nation under god and let this man do his job. if we are not happy with what he is doing then we vote him out in 2012, but the politicians need to get behind america and start earning their salary and do what they were elected to do.americans are weary of nothing but gloom an doom coming from washington, we are still the best country in the world so start appreciating this fact and make us everyday people a little happier and thankful for what we do have!!

    July 11, 2011 04:08 pm at 4:08 pm |
  14. Sniffit

    "But are things as grim as they feel? Maybe not."

    Don't let the giant corporations buying your advertising time hear you say that, CNN. They want better puppets in DC, the GOP has promised to provide them, and they're paying Crossroads GPS millions and millions of dollars to buy up ad time from media outlets like you.

    July 11, 2011 04:08 pm at 4:08 pm |
  15. vrim

    You can expect the republican fear factory to work double shifts the next few days to churn out some more darkness to offset the bright spots you cited.

    July 11, 2011 04:08 pm at 4:08 pm |
  16. Claudia, Houston, Tx

    You'll know when the economy is bad when the rich start complaining they're broke but they are gaining tremendous profits on the backs of Americans. We're not broke, the money just trickling up and not down and you can thank Republicans for that.

    July 11, 2011 04:35 pm at 4:35 pm |
  17. Joan

    Do you think that part of the reason that confidence iin the economy is so low is because the media and Republicans are constantly telling everyone how terrible it is and that another recession is possible? Really now, you all know that if you tell somebody something often enough they will probably start believing it. It is called self prophecy. If the media did more stories about positive things happening around the country, maybe confidence would go up, people would start spending and it could be helpful for America. I have relatives and friends in the States and it is not as dire as some make it out to be. The hype can be damaging. I guess since it is an election season there is no hope for fair and balanced reporting.

    July 11, 2011 04:37 pm at 4:37 pm |
  18. NC Independent

    As long as corporations are sitting on trillions and cutting jobs unemployment will remain high. Why hire more people when you can have 1 person do 5 jobs with no benefits like they are doing at my husband's place of employment. I guess greed is good if you are the company reaping the rewards.

    July 11, 2011 04:42 pm at 4:42 pm |
  19. vet in texas

    the Obama Administration has lost 500,000 jobs since his election, and the GOP governors are continually cutting jobs.......Public/government workers get paid by tax payer money, they then take those earning and purchase goods and services from the private sector, thus the private sector takes those earning and hires more people.

    So, whomever has been yelling "shrink the government" actually killed jobs for the "job creators" because they have lost millions of customers who are on unemployment. Interesting view point if you can look at things from a realistic standpoint.

    July 11, 2011 04:46 pm at 4:46 pm |
  20. snoopycj

    The sad part is the Democrats are punks and they will not promote these 'positive' things about the economy; yes we are not were we should be or need to be, but it's not like things have not improved since Obama took office. Remeber the stock market was at 7000 in mar 2009, we were LOSING 800K jobs a month and the GDP was declining each month. Again, we are not were we need to be, but things seem to have improved. The Democrats should point this out at every turn.

    July 11, 2011 04:46 pm at 4:46 pm |
  21. snoopycj

    @terry, va

    1. the housing market was screwed before obama came in
    2. the president (Republican or Democrat) can not do anything about Middle Eastern Oil...forget what Trump says
    3. the nation is divided because the politicans want it that way. The more divided the easier it is to control the masses

    July 11, 2011 04:52 pm at 4:52 pm |
  22. The Greedy Old Pigs have declared class war on America

    Ah, more insane rantings from the clueless:

    "And no, this is not attributed to states increasing tax rates. Texas and South Carolina, just to name two no-new-taxes states, saw tax revenue go up around 7 percent."

    Rick Perry and his teatard cultists in Texas have created a $20 BILLION budget deficit. It's kind of funny how the "anti-big government, pro-fiscal prudence" GOBPbaggers always wind up doing just the opposite. It's history, dude. Learn it.

    July 11, 2011 04:57 pm at 4:57 pm |
  23. snoopycj

    has anyone done fact checking on the tax breaks the US companies get vs the amount of people they hire? There's a rumor out that GE paid 7% tax in 2009/2010 and their total employee population feel by 20K people. The corporate tax in the USA is 35%, so if these companies are not paying the ACTUAL 35% tax now and still laying off people, why do the republicans think that lowering the rate will get these companies to hire?

    I'm confused. Let's see if the Corporations actually paid the current 35% tax rate, where would our economy be now? Would that be a source of new revenue to help...then maybe we don't have to tax the individual millionaire/billionaires.

    July 11, 2011 04:57 pm at 4:57 pm |
  24. Anonymous

    @ terry,va – "Here are the facts: 1 Unemployment up 135% to 9.2% since Obummie took office."

    Your first fact is wrong. In January 2009 the umemployment rate was 7.8%. Either your facts are wrong or you can't do math (which may be why you are unemployed). The unemployment rate is up 1.4%, or an increase of 18%.

    FYI – In Ronald Reagan's first 17 months, unemployment went from 7.5% to 10.1%, an increase of 35%.

    And he's Mr. President to you!!!!!!!!!!!!!

    July 11, 2011 04:59 pm at 4:59 pm |
  25. betterdays

    Step back and look at what's happened to our country since 9/11/01.

    Pretty effective, wasn't it?

    July 11, 2011 05:04 pm at 5:04 pm |
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