USA 's Worsening Economy in Cartoon

- relevant to Working Students

Things are getting worse. American economy has gone from anaemic growth to comatose state. Depressing with cartoons that says it all. Asia cannot decouple itself from relying on USA Economy for its exports. Once China finish spending allocated US$300 billions, there is not much world demand left.

Expect unemployment and inflation to come - its called stagflation.

Enjoy the pictures, though.

Marcus
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Record Unemployment
Employment in the U.S. unexpectedly stagnated in August, increasing pressure on Federal Reserve Chairman Ben S. Bernanke and President Barack Obama to spur an economy that’s barely growing two years into the recovery.
Payrolls were unchanged, the weakest reading since September 2010, the Labor Department said today in Washington. The median forecast in a Bloomberg News survey called for a gain of 68,000. The figures included a 48,000 drop in the information industry, mostly reflecting a strike at Verizon Communications Inc. The jobless rate held at 9.1 percent.

“This is further evidence that the economy is very close to stalling if not having stalled,” said Nariman Behravesh, chief economist at IHS in Lexington, Massachusetts, who forecast a gain of 15,000. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., called the report “grim and scary” in an interview on Bloomberg Television’s “In the Loop” with Betty Liu.
Stocks slumped and Treasuries rallied on bets the data raise the odds of another recession. Earnings and hours worked both declined, today’s report showed, reducing the purchasing power of consumers whose spending accounts for 70 percent of the world’s largest economy.
“We’re calling for a mild recession at this point,” said Julia Coronado, chief economist for North America at BNP Paribas in New York. “We’ll see QE3 definitely,” she said, referring to a third round of large-scale asset purchases by the Fed. “It helps put a floor under the economy and stabilize things.”

Stocks Slump - hurts middle class
The Standard & Poor’s 500 Index fell 2.5 percent to 1,173.97 at the 4 p.m. close in New York. The yield on the benchmark 10-year note dropped to 1.99 percent from 2.13 percent late yesterday.
The report raises the political stakes for Obama as he prepares to address a joint session of Congress next week. An unemployment rate stuck near 9 percent has helped push Obama’s disapproval rating to an all-time high, according to a Quinnipiac University Aug. 16-27 poll of 2,730 registered voters. Some 52 percent disapprove of Obama’s job performance, up from 46 percent in July.
Gene Sperling, director of the White House National Economic Council, said Obama will propose tax and spending initiatives that will have a “significant” impact.
“There’s no question we need stronger jobs growth, stronger growth overall,” Sperling said today in a Bloomberg Television interview.

Obama Proposal - stale solution

Among the steps Obama has been considering are more infrastructure spending, tax incentives to spur hiring, a reduction in the employer portion of the payroll tax and changes to unemployment insurance to subsidize worker retraining, according to people familiar with discussions.
Obama’s options will be limited by opposition to increased spending from Republicans in Congress.

“I’m not sure what the administration can do at this point,” said Gus Faucher, director of macroeconomics at Moody’s Analytics Inc. in West Chester, Pennsylvania. “I think any full-bore stimulus is dead in the water.”
The Office of Management and Budget said in an update of its economic forecasts through August that the jobless rate will average 9.1 percent in 2011 (more than 9.1 million Americans are jobless) and show little change next year with an average of 9 percent. It won’t fall below 6 percent until 2016, the OMB said.
Political squabbling over the budget and mounting fear of a default in Europe caused the S&P 500 to plummet 17 percent from July 22 to Aug. 8, prompting companies and consumers to cut back. The lack of hiring is one reason Bernanke last week said the central bank still has tools available to stimulate growth.

Bond Purchases - Government borrows to spend
The Fed ended a $600 billion bond-buying program in June and last month said it would keep its benchmark interest rate near zero at least through the middle of 2013, adding a specific time-frame to its low-rate pledge for the first time.
Further options for the Fed include extending the maturity of Treasury securities in its $1.65 trillion portfolio to push down long-term interest rates, purchasing more Treasuries, or expanding the range of securities it buys, El-Erian said.
Estimates of the 86 economists surveyed by Bloomberg for payrolls ranged from a decline of 20,000 to a 160,000 increase. The unemployment rate was projected to hold at 9.1 percent, according to the survey median. The July gain in payrolls was revised down to 85,000 from 117,000.
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