Whither the Middle Class?

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Whither the Middle Class?

• Jared Bernstein
• Economic Policy Institute
• jbernstein_at_epi.org

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Real Economy

• Its officialrecession, that is.
• Consumer retrenching, big time.
• Investment squeezed on credit and profit sides
• Exports/Imports Maybe, maybe not
• Government most reliable source of short term
  growth?

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Source Bureau of Labor Statistics, EPI
Employment Projections
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Employment Declines Across Sectors
Source Bureau of Labor Statistics
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Source Bureau of Labor Statistics
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Source Bureau of Labor Statistics
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Source Bureau of Labor Statistics
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Source Bureau of Labor Statistics
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(No Transcript)
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Source EPI analysis of Census Bureau data
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(No Transcript)
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Source EPI Analysis of BLS data and
Goldman-Sachs unemployment rate forecasts
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Real GDP and Unemployment 2008q1-2009q4
Source Goldman Sachs Forecasts
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Source Mark Zandi, Moodys economy.com
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Source Mark Zandi, Moodys economy.com
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Un-Real Economy

• Financial Markets Dow, Nasdaq, SP 500, Russell
  2000all down about 40 ytd.
• But good newsTed Spread responding (4.6 10/10
  2 11/7)?
• Housing some signs bottom in sight, but no signs
  re uptickprices still fallinginventory
  overhang
• TARP Certainly not a confidence builder yet.
• Fed pushing on string but not giving up.

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Pres/VP Elect

• Fiscal constraints?
• Deficit could go as high as 6 of GDP, but debt
  around 40 (avg 46 in 1990s).
• Must he alter his long-term plans--hth
  care/energy?
• There is a time for budget austerity this aint
  it.
• Middle-class, poor, labor agenda (EFCA, min wg,
  UI reform, OSHA, etc)

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Their Agenda

• Morph his recovery package with House Ds (Making
  Work Pay tax cuts new jobs tax credit mortgage
  relief small biz, UI)
• Manage TARP
• Tax agenda
• Energy/Health Care
• Infrastructure (who gets the jobs?)
• Regulation (Cooper Union speech)