Adding Insult to Injury
Vol. XIX, Art. 18

Today’s feature story:

“WASHINGTON (Reuters) May 10, 2009 – The U.S. economy is expected to begin growing in the second half of this year, while the jobless rate is expected to peak in the first quarter of 2010, according to a survey of top forecasters released on Sunday.

“The consensus forecast of panelists surveyed in the Blue Chip Economic Indicators newsletter for May predicted economic growth, as measured by real gross domestic product, would shrink 2.8 percent in 2009 but grow 1.9 percent in 2010 ...

“‘The past month provided fresh evidence the decline in business activity is starting to moderate, buttressing consensus expectations that the economy will emerge from recession in the second half of this year,’ the newsletter said.

“... according to a survey ... the consensus forecast of panelists ... the newsletter said ...”. So all that hallucinating makes it official. Happy days are here again. Pretty soon.

That panel of top forecasters should have read Bob Herbert’s New York Times article on May 9th – the day before they consulted their crystal balls. He captioned his story:

“Far From Over”

“It’s a measure of just how terrible the economy has become that a loss of more than a half-million jobs in just one month can be widely seen as a good sign. The house is still burning down, but not quite as fast,” he began.

“I can understand why people are relieved that we no longer seem to be hurtling toward a depression, but beyond that I see very little to be happy about.

“The economy is in shambles. Nearly 540,000 jobs were lost in April, a horrifying number. The unemployment rate rose to 8.9 percent. Even the most optimistic observers expect the job losses to continue, although, hopefully, at a slower pace. The unemployment rate is expected to keep on climbing, like some monster from the movies, toward double digits.

“We are stuck in what is – or will soon be – the worst economic downturn since the 1930s. Newspapers and the U.S. auto industry are on life support. The employment picture for even the most well-educated Americans – men and women with four-year degrees or higher – is the worst on record.

“If there is something about this economy to be cheerful about – something real – I wish someone would let me know.

“Poverty and homelessness are increasing and, as Lawrence Mishel, the president of the Economic Policy Institute, said during an interview this week, ‘There are a whole lot of people who are going to be economically desperate for many years.’

“Joblessness is like a cancer in the society. The last thing in the world that you want is for it to metastasize. And that’s what’s happening now. Don’t tell me about the stock market. Don’t tell me about the banks and their perpetual flimflammery. Tell me whether poor and middle-income families can find work. If they can’t, the country’s in trouble.

“One reason the employment losses slowed somewhat in April was that the government added 72,000 jobs, most of them temporary hires as part of the preparation for the 2010 Census. The private sector dumped 611,000 jobs. Moreover, the Labor Department revised the job losses for March upward, from 663,000 to 699,000, and for February, from 651,000 to 681,000. Some 5.7 million jobs have been lost since the start of the recession in December 2007.

“Mr. Mishel has been trying to call attention to the human toll caused by job losses on this vast scale. The institute estimates that the poverty rate for children is in danger of increasing from 18 percent, which is where it was in 2007 – the last year for which complete statistics are available – to a scary 27.3 percent in 2010.

“For black children, you don’t want to know. But I’ll tell you anyway. The poverty rate for black kids was 34.5 percent in 2007. If the national employment rises, as expected, to the vicinity of 10 percent next year, the poverty rate for black children would rise to 50 percent or higher, analysts at the institute believe.

“That would be a profound tragedy.

“We already know that children are being harmed in families hammered by job losses, home foreclosures and the myriad stresses that grip families trying to cope with economic reversals. Dr. Irwin Redlener, the president of the Children’s Health Fund and a professor at Columbia University’s Mailman School of Public health, has referred to these youngsters as the ‘recession generation’, and has described what is happening to them as ‘a quiet disaster’.

“Much of the impact of the Obama administration’s economic stimulus efforts is still to come, but those efforts were never narrowly focused on the need for job creation and are not nearly large enough to cope with the mammoth job losses that are occurring. The official unemployment rate for men is already at 9.4 percent, and for black workers 15 percent.

“To get a sense of the task ahead, consider that 7.8 million jobs would have to be created just to bring us back to where we were when the recession began. That’s because the working-age population has continued to grow since then. The economy has to create about 127,000 jobs a month just to keep up with population growth. That comes to more than 2 million jobs since the start of the recession, which you then add to the 5.7 million that have been lost.

“There is no light at the end of this tunnel.

“It may not be popular, and it certainly won’t sit well with the so-called deficit hawks in Congress, but there is a real need for additional government spending to further stimulate the economy and create jobs. (Think infrastructure, among other things.) The kind of employment distress we’re confronting is not sustainable. Help will be needed for people whose unemployment benefits run out, who are ill but not covered by medical insurance, who are homeless or otherwise in desperate economic straits.

“The crisis is far from over.”

[We didn’t omit a single word from Mr. Herbert’s article. There was no need to. Nor was there a need to add anything. There’s a crying need to disseminate this message, though.]

“The horizon on the open sea is an illusion, a destination that you can always see, but never reach, no matter how long the journey”... and that’s the way Patrick Brethour began his report on May 8th.

Mr. Brethour didn’t prepare his report for a U.S. newspaper, however. He was writing in Canada about the Port of Vancouver’s reversals, but he provided facts and figures about declining operations in U.S. ports, as well.

“The Port of Prince Rupert, and its ambitions for an expanding container terminal, are just on that kind of a journey as the global recession plays havoc with its best-laid plans to turn northern British Columbia into the express route for Asian goods into the heart of North America ...” he began.

“Yet, the horizon recedes. There will not be any ground-breaking ceremonies in Prince Rupert next month ... Now, the horizon has moved out of reach again ...

“Rather than enter this year at full capacity, the container port was running at 60 per cent. And that may be a high point, in the short run. The port authority has now set the 2009 goal of attracting traffic equal to 40 to 50 per cent of the container port’s capacity, an undoubtedly sober assessment in step with the softening volumes in the first quarter ...

“The stark fact is this: Container traffic fell by nearly half, 48 per cent, in the first quarter of the year from the last three months of 2008. Ports up and down the West Coast of North America also saw declines in traffic, a consequence of the dramatic slowdown in global shipping, which is headed for the first annual drop on record. Everyone is losing traffic, but the percentage drop in Prince Rupert was far steeper than in Seattle or Vancouver (each down 17 per cent) or the mega-port of Los Angeles (down 21 per cent).”

So forget about surveys, panelists and newsletters. Take to heart what Mr. Herbert and Mr. Brethour are saying about the decaying conditions here and around the world. The musings and forecasts in the U.S. media are deliberately misleading. Reports are accurate on one point, however. This “recession” is sure to be seen eventually by dull Americans as a thing of the past ... because the truth of the matter, and what is being deliberately covered up, is that it has already become a depression.