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There's still a gaping hole in the economy – BNN



June was another big month for job growth as employers called back workers from coronavirus-induced layoffs. As a resurgence of the disease in the U.S. raises lots of questions about whether the growth can continue, though, I thought it might be informative to take a look back.

That is, rather than focus on what happened in June, let’s add up what has happened to payroll employment since February, when this strange, awful adventure began.

“There’s still a lot of hardship and heartbreak in these numbers,” White House economic adviser Larry Kudlow said in an uncharacteristically sober reaction to the jobs report. Indeed there is. Nonfarm payroll is down by 14.7 million, or 9.6 per cent, since February, on a seasonally adjusted basis.

Every one of the 11 supersectors into which the Bureau of Labor Statistics divides the U.S. economy employs fewer people than it did then, although for some the damage has been far worse than for others.

Employment in financial activities — aka the finance, insurance and real estate sector — has so far been only modestly affected. The leisure and hospitality supersector has, not surprisingly, been by far the hardest hit.

Get down to narrower industries, and there are some interesting standouts. I’ve ranked the worst-hit here by percentage losses rather than jobs.

The motion picture industry numbers include theaters as well as production. Although employment in making movies and television shows will surely come roaring back soon — there are logistical issues in working around COVID-19, but it’s not like demand for the product has gone down — jobs at movie theaters may not.

The same goes for sports leagues that are starting to put their players to work again for TV audiences but won’t provide anywhere near the usual level of ancillary employment until spectators are allowed to come back.

Most of the other sectors in the above list similarly can’t expect to return to February’s employment levels until the coronavirus has ceased to be a major threat.

Finally, here’s the select list of gainers, only a few of which have added enough jobs to be of more than curiosity value (which is why I’ve gone back here to ranking by number of jobs added rather than the percentage gain):

Add up all the jobs gained at superstores, supermarkets and package deliverers — the big winners in a stay-at-home economy — and it gets you to just 9 per cent of the job losses at food services and drinking places. The U.S. economy isn’t really coming back until everybody thinks it’s safe to go out to eat again.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”

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The US economy is reliant on consumer spending – can it survive a pandemic? – The Conversation US



The COVID-19 pandemic has radically affected the American economy, reducing spending by American households on materials goods, air travel, leisure activities as well as the use of automobiles. As a result, greenhouse gas emissions have temporarily fallen dramatically.

While this may be a positive for the environment, the social price is high: Since the U.S. economy depends heavily on consumer spending, the country is experiencing the highest unemployment rate since the Great Depression, the threat of homelessness for tens of thousands of people and a failure of businesses large and small. How did the U.S. arrive at the point whereby mass consumption – and the greenhouse gas emissions associated with it – is necessary for economic and social well-being? Are greenhouse gas reductions and a thriving economy incompatible?

A consumer society is a 20th-century construct. The American Dream has become synonymous with buying material goods such as cars, houses, furniture or electronics, distorting its original meaning. Today, the spending habits of American households make up 70% of the U.S. gross domestic product, a measurement that describes the size of the economy. U.S. companies spend about US$230 billion on advertising each year, half of all the money spent on advertising globally.

Buy your dreams

Today’s consumer society emerged after the end of World War I, fueled by the emergence of the modern advertising industry and facilitated by widespread adoption of consumer credit. Edward Bernays, the nephew of Sigmund Freud, is generally credited with inventing the field of marketing during the 1920s. The essence of his approach was to tap into people’s desires to feel good, powerful and sexy instead of emphasizing the usefulness of a product. Bernays created the term “engineering of consent” and popularized the term “consumer” when referring to American people.

Mass consumption grew steadily until the onset of the Great Depression. But the deliberate creation of the present consumer society took off in earnest during the 1940s and 1950s. When WWII ended, so did wartime industrial production. Industry leaders shifted their enormous production capabilities from the military to the civilian sector.

Many manufacturing jobs created by World War II were lost when the war ended.
Photo by Science in HD on Unsplash

At the same time, President Harry Truman was concerned with looming unemployment among returning veterans and saw mass production of consumer goods as the solution. The 1944 GI Bill helped returning veterans purchase houses with down payments and government-guaranteed loans. Mortgage interest deductions and government-financed infrastructure – local utilities and roads, a national highway system – made suburban homeownership a logical financial plan for families, while Social Security provided relief from having to save for old age.

Labor unions, too, were vested in increasing wages for their members, so working families could afford houses, cars and household appliances. At this particular historical juncture, business, government and labor came together, united in their shared goal to increase household consumption as the bedrock of economic prosperity and social harmony.

These developments took place in the context of the post-war euphoria over the uncontested power of the U.S., the post-Depression hunger for a better life, advances in cheap mass production and a demographic boom. Consumerism became a symbol of the superiority of the capitalist system over Soviet-style communism, as illustrated by the famous “Kitchen Debate” in 1959 at the American National Exhibition in Moscow. Standing among the sleek labor-saving appliances of a modern American kitchen, Vice President Richard Nixon demonstrated to Soviet Premier Nikita Khrushchev the higher quality of life of working people in the U.S.

[embedded content]
The superiority of capitalism over communism, a debate between two world leaders, was symbolized by the splendid modern American kitchen.

The great transformation

The results of this business-government-labor alliance were astonishing. National output of goods and services doubled between 1946 and 1956, and doubled again by 1970. Mass-produced cheap and comfortable single-family homes, increasingly distant from city centers, became affordable. The iconic 1949 Levittown on Long Island, New York, was a model of the suburbs: uniform, convenient, segregated by race and dependent on the automobile. By 1960, 62% of Americans owned their homes, in contrast to 44% in 1940. Suburban shopping malls, uniform and racially segregated, became by default public gathering spaces, replacing city streets, cafes and places of commerce.

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This social transformation occurred in a span of a single generation. Consumerism and a suburban lifestyle became the organizing principles of society and synonymous with fundamental values such as family well-being, safety, democratic political freedom and the American Dream.

Suburban housing development in Arizona.
Photo by Avi Waxman for Unsplash

Basics get bigger

Since the 1950s, this version of a good life – shaped by advertising of what was necessary to live well – has been remarkably stable. But there is a twist: The notion of what represents basic comfort has been steadily moving toward larger and more – SUVs and myriad conveniences and technologies, bigger and more dispersed houses filled with furniture and stuff and additional bathrooms and bedrooms, larger kitchens, media and exercise rooms and outdoor living rooms.

Today, the best predictor of household carbon footprint is income. This correlation holds true in different countries, regardless of political views, education or environmental attitudes.

Rethinking consumption

Consumption comes at a high ecological cost. As the gross national product grows – driven largely by household consumption – so do greenhouse gas emissions. Many scientists and policy analysts believe that as technology increases energy efficiency and replaces fossil fuels with renewable energy sources, greenhouse gas emissions will be significantly reduced. But despite the rapid advances in these technologies, there is no evidence that trends in greenhouse gas emissions are separate and independent from economic growth trends. Neither is there a basis for the idea that green growth will prevent the anticipated climate catastrophe that the world is facing.

At the same time, there is little evidence that Americans have become happier in the last seven decades of growing consumerism.

Buying power is not the only measure of happiness.
Photo by Conner Baker for Unsplash

This pandemic reveals to me the vulnerability of an economy heavily dependent on a single source of economic activity – consumption. From my perspective, the U.S. would be better off if the economy – our collective wealth – were more heavily weighted toward public spending on, and investment in, education, health care, public transit, housing, parks and better infrastructure, and renewable energy. Such an economy would contribute to human well-being, emit less greenhouse gas and be less vulnerable to sudden disruptions in consumer spending.

As I see it, it is time for an honest public conversation about the carbon footprint of our “basic” lifestyles and what Americans need rather than what they are told they need.

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Thai leader says unity necessary to revive virus-hit economy – News 1130



BANGKOK — Thailand’s prime minister, facing growing demands from students for change, warned Thursday that the nation must pull together to overcome the economic damage caused by the coronavirus pandemic.

In a speech marking the appointment of a new team of financial specialists to his Cabinet, Prayuth Chan-ocha said the economic crisis will not go away quickly.

Thailand has been praised for its handling of the health effects of the coronavirus, with no local cases reported for 80 days. But it has suffered an especially strong shock to its economy because of its heavy dependence on tourism and exports.

Prayuth’s speech comes at a time of growing political pressure, as a student-led protest movement issues increasingly strident calls for his government to step down, the military-installed constitution to be revised, and limits to free speech to be lifted to promote democracy.

Some of the protesters’ criticisms challenge aspects of the country’s constitutional monarchy, setting them at odds with the conservative political establishment led by royalists and the military.

Prayuth, as army commander, led a coup in 2014 that ousted an elected government, served as prime minister in the military regime that followed, and returned as prime minister after a general election last year that was widely seen as free but not fair.

He declared Thursday that “our future is in the hands of the young,” but pushed aside the demands of the mainly young protesters at frequent rallies around the country.

“Right now, we must focus on the economic survival of tens of millions,” he said. “Let’s get the economy going first, first get that done by working together, and we can look to fixing the other issues, collaboratively, later.”

He also referred to the political conflict that has afflicted the country for much of the past decade and a half, including street clashes and two military coups.

“The politics of division that rejects a united approach to solving problems belongs to another era in history,” he said.

Prayuth said he appointed experts rather than politicians to the Cabinet to manage financial policy because “the economy is as big a threat to our lives as is the health threat.”

The Asian Development Bank recently forecast that the economy will contract by 6.5% in 2020, compared to its December 2019 projection of 3.0% growth.

“We are a small boat in a big ocean, and our economy can only start returning to normality when the rest of the world starts returning to normality,” Prayuth said.

Grant Peck, The Associated Press

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As economy recovers, some Toronto restaurants commit to end tipping – CP24 Toronto's Breaking News



TORONTO – As the Canadian economy continues to adapt to the reality of the COVID-19 pandemic, some restaurants in Toronto are saying goodbye to a service industry staple: tipping.

So far three restaurants — Richmond Station, Ten and Burdock Brewery — have publicly signed onto doing away with the practice.

The aim is to make the industry more equitable and provide service workers with access to the social safety nets afforded to other professions.

Each of them has instead implemented what is known as a “hospitality included” fee — essentially an enforced gratuity, usually set at 18 per cent of the bill.

Unlike the practice of “tip-pooling,” which typically pays back-of-house staff such as cooks and dishwashers significantly less than front-of-house staff, a hospitality included fee is designed to be more evenly distributed.

Ryan Donovan, co-owner of Richmond Station, says his team decided it was the right choice when they saw how badly service workers were hit by the pandemic.

But James Rilette, vice-president of the industry group Restaurants Canada, doesn’t think ending tipping will go over well with customers.

He says conversations with restaurant owners and customers over the years have led him to believe that consumers tend to prefer tipping over price increases on menu items.

Rilette says the biggest problem is sticker shock — since people are going to react to seeing the price of their burger go up 20 per cent.

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