On the day before Thanksgiving the nation’s economists gave us all tidbits to evoke the giving of thanks. Not slabs of good news, slathered with high percentage sauce. Not a full meal, just a snack. The economy grew, the number of workers applying for unemployment benefits fell. Income rose a tad. So did spending. But orders for capital goods, things like building cranes and steel girders, fell. So did sales of new homes, even though home prices dropped to the lowest point in seven years.
Maybe the best news from some perspectives was that Americans saved 5.7 percent of their disposable income in October, which was up from 5.6 percent in September. Before the recession, the savings rate was just a smidgen over 1 percent. This means that the average family is now (1) paying down debt; and (2) building up savings so that the next recession won’t catch them as un-prepared as this one did.
A high savings rate won’t be seen as great news by economists raring to see consumer spending rise. But old-fashioned types such as this editor will allow themselves a smile of satisfaction when they learn that at least some of the population has slowed down on spending and started to save.
Saving may make a family more secure, but spending makes the economy grow much faster. In the quarter that ended in September, consumer spending increased at a 2.8 percent rate. That’s the most in nearly four years — but consumer spending will have to rise twice as fast to bring the unemployment rate back to pre-recession levels, economists say.
They are predicting that one of every 11 of us will be out of a job for the next several years.
Hit especially hard will be those entering the work force — the new college and university graduates, the high school grads who have decided to go to work rather than get more education and, at the bottom of the heap, the dropouts.
THOSE ARE the Thanksgiving economic tidbits. A tasty snack for the nation as a whole. Businesses can grow modestly when the economy chugs along at a 2.6 percent pace. Corporations can make profits, pay dividends and see the price of their stock increase.
But persistent 9 percent unemployment spells misery for those struggling to get their foot on the first rung of the earnings ladder. Our society will have to provide a much wider, much tighter security net to mitigate their misery, or expect today’s army of angry discontents to grow.
— Emerson Lynn, jr.
