What Is The Best Place To Live In The United States To Prepare For The Coming Economic Collapse?

May 3, 2011 by admin  
Filed under Economic News, Featured Stories, US News

By Michael Snyder – BLN Contributing Writer

What is the best place to live in the United States? I get asked that question all the time. My answer can be summed up in two words: it depends. The truth is that the answer is going to be different for each person. All of us have different goals and different needs. If you have a very strong network of family and friends where you live right now, you might want to think twice before moving hundreds or thousands of miles away. If you have a great job where you live right now, you might want to hold on to it. You should not just assume that you are going to be able to pick up and move to another part of the country and be able to get a similar job right away. The United States is in the midst of a very serious economic decline right now, and wherever you live you are going to have to provide for your family. Just because you move somewhere new does not mean that you are going to leave your problems behind. In fact, you might find that they moved right along with you. With all that being said, the reality is that there are some places in the U.S. that are going to be much more desirable than others when the economy totally falls apart. For example, during a total economic collapse it will not be good to be living in a large city or in a densely populated area. Just think about what happened in the aftermath of Hurricane Katrina. If the entire nation is going through something like that, you don’t want to have hundreds of thousands of close neighbors at that point. So when thinking about where you want to be when everything falls apart, population density should be a major factor. But there are other factors as well and no area of the United States is perfect.

If you live in or near a major city right now, that is okay. Most Americans do. Even if you have limited financial resources at the moment, you can start developing a plan that will get you where you eventually want to go. If you want to move to another part of the country you can start applying for jobs out there. You can also be working hard to develop a business that would enable you to move. Perhaps you have friends or family in more isolated areas that would allow you to stay with them during an economic collapse.

Those that possess more financial resources could start thinking about getting a second home in a location that is more rural.

The key is to come up with a plan and to be working towards accomplishing that plan.

If you don’t have a plan yet, hopefully the following information will give you something to think about. Not all areas of the United States are equal, and all of them do have problems.

The following are some thoughts about the best place to live in the United States….

The Northeast

A major problem with the Northeast is that it is just so darn crowded. Yes, there are some rural areas, but the overall population density of the region is so high that it would be really hard to go unnoticed for long in the event of a major economic collapse.

Another thing that is not great about the Northeast is that so much of the population lives near the coast. As we saw in Japan recently, living near a coastline is not necessarily a good thing. While it is likely safer to live along the east coast then the west coast, the truth is that there is an inherent level of insecurity when it comes to living in coastal areas. You never know when the next hurricane, oil spill or tsunami is going to strike.

Also, the Northeast is really quite cold. So staying warm and growing your own food would be more difficult than in some other areas of the country.

The Mid-Atlantic

The Mid-Atlantic is one of the most beautiful areas of the nation. Unfortunately, it suffers from many of the same problems that the Northeast does.

The Mid-Atlantic has a very high population density. For example, the area around Washington D.C. is pretty much all suburbs for 50 miles in all directions.

The weather is nicer than in the Northeast and there are some less dense areas once you get south of Washington D.C.

If you think that the Mid-Atlantic might be for you, you might want to check out North Carolina or South Carolina. The people tend to get friendlier the further south you go and there are definitely some areas that could potentially work.

Florida

Florida is generally not going to be a place that you want to be during an economic collapse. The housing market has absolutely collapsed down there and the crime rate is already very high. It is also very densely populated.

The weather is very nice down in Florida, but one big thing that you need to consider when it comes to Florida is the fact that it is very flat and most of Florida is just barely above sea level. In fact, quite a bit of Florida is actuallybelow sea level.

In addition, hurricanes are always a major threat in Florida. It is a beautiful state, but there is a lot of risk to living down there.

The Southeast

The Southeast has really taken a pounding over the last few years. First it was Hurricane Katrina, and then it was the BP oil spill and then it was the tornadoes of 2011.

There is a lot of poverty in that area of the country. There is also a lot of crime.

There are a lot of great people who live down in the Southeast, but if you do not know your way around it can be a very difficult place to move to.

The Mid-South

One of my favorite places east of the Mississippi River are the mountains along the Tennessee/North Carolina border. If you must be in the eastern half of the United States, that is not a bad choice.

Where you do not want to be is anywhere near the New Madrid fault zone. The New Madrid fault zone covers portions of Illinois, Indiana, Missouri, Arkansas, Kentucky, Tennessee and Mississippi. The biggest earthquakes in the history of the United States were caused by the New Madrid fault. Many are convinced that we are going to see an absolutely catastrophic earthquake along the New Madrid fault at some point.

So if you want to live in the Mid-South, it is highly recommended that you stay far away from the New Madrid fault zone.

The Upper Midwest

The Upper Midwest was once one of the great manufacturing regions of the world, but now much of it is known as the “rust belt”.

Formerly great manufacturing cities such as Detroit are now absolutehellholes. Tens of thousands of our factories and millions of our jobs have been shipped overseas.

There are some really great people (including some good friends of this column) that live up there, but the truth is that the region is really cold and unemployment is rampant.

The Upper Midwest is an area that people want to get out of. It is probably not a great place to move to.

However, if you do need a job, one place to look is a little bit west of there. Thanks to an abundance of natural resources, unemployment in North Dakota and South Dakota is very low. If you really need a job you might want to look into those two states.

The Southwest

In the Southwest there are a whole lot of freedom-loving Americans, the weather is very warm and there is a lot of space to get lost.

However, the Southwest is also very dry and in many areas there is not a lot of water. Drought and wildfires are quite common.

In addition, illegal immigration is rampant and is a constant security threat.

If you are familiar with that area of the country it is not a bad choice, but if you do not know what you are doing it could end up being disastrous for you.

The Great Plains

As long as you are far enough away from the New Madrid fault, the Great Plains is not a bad choice.

It is very, very flat out there, and it can be quite windy, but the good news is that you should be able to grow your own food.

In addition, the population density is generally very low in most areas.

One big negative, as we have seen recently, is tornadoes. The United States experiences more tornadoes that anywhere else in the world, and “tornado alley” generally gets the worst of it.

The West Coast

During an economic collapse, the West Coast is not a place that you will really want to be. Just take a look at the state of California already. It is aneconomic nightmare.

Millions of people have left California over the past couple of decades. The millions of people that have left have been replaced mostly with illegal aliens.

Oregon is better, although they have very high taxes and they are experiencing huge economic problems right now as well.

The best area along the West Coast is the Seattle area, but you won’t want to be anywhere near a major population center when things totally fall apart.

Also, the West Coast lies along the “Ring of Fire“. Considering what just happened in Japan and what has been happening in other areas along the Ring of Fire lately, the West Coast is not an area that a lot of people are recommending.

The Northwest

Large numbers of freedom-loving Americans have been moving to the states of Montana, Idaho and Wyoming. You can also throw eastern Washington and eastern Oregon into this category as well.

It gets cold up in the Northwest, but not as cold as the Upper Midwest. There are lots of rivers, streams and lakes and in certain areas there is plenty of rain.

The population density is very low in most areas and there is an abundance of wildlife. Housing prices are reasonable and in many areas you can grow your own food.

The Northwest is one of the favorite areas of the United States for preppers. It is far from perfect, but it does have a lot of advantages.

Alaska And Hawaii

Neither Alaska or Hawaii is recommended. Alaska lies along the “Ring of Fire” and it is very, very cold. Also, almost everything has to be either shipped or flown into Alaska. In the event of a real economic collapse, supplies to Alaska could be cut off and shortages could develop very quickly.

Hawaii has a huge population and it does not have a lot of room. Like Alaska, most supplies have to be either shipped in or flown in. And one really bad tsunami could pretty much wipe Hawaii out.

But once again, there is no “right answer”. There are areas of just about every U.S. state that could potentially work well during a major economic collapse.

When assessing where “the best place to live in the United States” is, it is important to examine your own personal factors. What will work for me and for my family will not necessarily work for you and your family.

So what do all of you think about this list? Which area of the country do you think is best for those Americans who are seeking to prepare themselves for the coming economic collapse?

You Call This An Economic Recovery? 44 Million Americans On Food Stamps and 10 Other Reasons Why The Economy Is Simply Not Getting Better

March 4, 2011 by admin  
Filed under Economic News, Featured Stories, US News

When Barack Obama, the Federal Reserve and the mainstream media tell us that we are in the middle of an economic recovery, is that supposed to be some kind of sick joke?  According to newly released numbers, over 44 million Americans are now on food stamps.  That is a new all-time record and that number is 13.1% higher than it was just one year ago.  So how many Americans have to go on food stamps before we can all finally agree that the U.S. economy is dying?  50 million?  60 million?  All of us?  The food stamp program is the modern equivalent of the old bread lines.  More than one out of every seven Americans now depends on the federal government for food.  Oh, but haven’t you heard?  The economy is showing dramatic improvement.  Corporate profits are up.  The stock market is soaring.  Happy days are here again.

It just seems inconceivable that anyone can claim that the economy is improving when the number of Americans on food stamps continues to set a brand new record every single month.  But the food stamp program is not the only indicator that the economy is still having massive problems.  The following are 10 more reasons why the U.S. economy is simply not getting any better….

#1 Some recent statistics actually indicate that the number of unemployed Americans is still going up.  According to Gallup, unemployment in the United States rose to 10.3% at the end of February.  That is the highest number Gallup has reported since early last year.

#2 The housing industry is still a complete and total disaster.  In fact, new home sales in the U.S. in January were 11.2% lower than they were in December.  Not only that, the number of new home sales in January was 18.6% lower than the number of new home sales in January 2010.  That is not a sign of improvement.

#3 There wouldn’t even be much of a housing industry at all at this point if it was not for the U.S. government.  Right now the U.S. government is either writing or guaranteeing well over 90 percent of all mortgages in the United States.  So what would the housing market look like in 2011 if the government was not in the picture?

#4 In 2010, more than a million U.S. families lost their homes to foreclosure for the first time ever, and that number is expected to go even higher in 2011.

#5 Due to rampant economic decay and record numbers of foreclosures there are areas in most of our major cities that now look like “war zones”.  For example, the Huffington Post is reporting that there are now approximately 15,000 vacant buildings in the city of Chicago and there are approximately 60,000 vacant houses and apartments in the city of Las Vegas.

#6 According to the Oil Price Information Service, U.S. drivers spent an average of $347 on gasoline during the month of February, which was 30 percent more than a year earlier.  This represented 8.5% of median monthly income.  So what is going to happen when gas prices go even higher?  Sadly, the average price of gasoline in the U.S. has risen another 4 cents since yesterday and it is likely to go much higher from here.

#7 The U.S. trade deficit continues to grow.  The trade deficit was about 33 percent larger in 2010 than it was in 2009, and the 2011 trade deficit is expected to be even bigger.

#8 The CredAbility Consumer Distress Index, which measures the average financial condition of U.S. households, declined in every single quarter in 2010.

#9 The number of Americans that have become so discouraged that they have given up searching for work completely now stands at an all-time high.

#10 The U.S. national debt is growing faster than ever.  The Obama administration is projecting that the federal budget deficit for this fiscal year will be a new all-time record 1.65 trillion dollars.  It is hard to even imagine how much money that is.  If you went out today and started spending one dollar every single second, it would take you over 31,000 years to spend one trillion dollars.  Long ago the U.S. government should have been getting these deficits under control, but instead they are just getting even larger.

So in light of the statistics above, can anyone really claim that we are in the middle of an economic recovery?

The truth is that there is no sign that any of the long-term trends that are destroying the U.S. economy are even slowing down.

Millions of jobs continue to be shipped overseas.

The U.S. dollar continues to be devalued.

The federal government continues to go into more debt.

State and local governments continue to go into more debt.

Our trade deficit continues to grow.

Our cities continue to be transformed into wastelands as they are being systematically deindustrialized.

The number of Americans that are dependent on the government continues to soar.

The U.S. middle class continues to shrink.

I know that I harp on these themes over and over, but it is vitally important that everyone understands that the mainstream media is lying to us.

The U.S. economy is dying a very painful death and there is no hope on the horizon.

Things are not going to be getting better.  Well, they may get a bit better for the boys down on Wall Street, but for the rest of us our standards of living are going to continue to decline.

The best days for the U.S. economy are already behind us.  What lies ahead is a whole lot of pain.

We are going to pay the price for decades of corruption and incompetence.

An economic collapse is coming and you had better get ready.

IMF, warning of war, Ready To Put Egypt Into Debt

February 1, 2011 by admin  
Filed under Featured Stories, World News

Source: AFP

The International Monetary Fund stands ready to help riot-torn Egypt rebuild its economy, the IMF chief said Tuesday as he warned governments to tackle unemployment and income inequality or risk war.

Dominique Strauss-Kahn also said rising food prices could have “potentially devastating consequences” for poorer nations, and warned that Asia’s fast-growing economies faced a risk of a “hard landing”.

Overall, according to the IMF managing director, widening imbalances across and within countries were sparking tensions that threaten to derail the fragile global economic recovery — and could even spark armed conflict.

As Egyptian protesters gathered in their thousands demanding the departure of President Hosni Mubarak, Strauss-Kahn said: “The IMF is ready to help in defining the kind of economic policy that could be put in place.”

In a speech in Singapore, he said rampant unemployment and a growing income gap was a “strong undercurrent of the political turmoil in Tunisia and of rising social strains in other countries”.

Nationwide demonstrations last month led to the ouster of Tunisian strongman Zine El Abidine Ben Ali, and massive street protests are raging in Egypt seeking an end to Mubarak’s more than 30-year rule.

“As tensions between countries increase, we could see rising protectionism — of trade and of finance,” Strauss-Kahn said.

“And as tensions within countries increase, we could see rising social and political instability within nations — even war.”

The IMF boss called anew on China to adjust its exchange rate in its own economic interest, but said he disagreed with critics in the United States and elsewhere who want a rapid revaluation to the yuan.

He said the US government itself should not have a problem financing its massive debt, and downplayed fears over Japan’s debts after a downgrade last week by Standard & Poor’s.

But for the global economy as a whole, Strauss-Kahn struck a worried tone.

“While the recovery is under way, it is not the recovery we wanted,” he said.

“It is a recovery beset by tensions and strains — which could even sow the seeds of the next crisis.”

He said the different pace of recovery between advanced and emerging economies was unbalanced and echoed the situation just before the global economic crisis struck in late 2008.

“While growth remains below potential in the advanced economies, emerging and developing economies are growing much faster — and some may soon be overheating,” he said.

Growth in economies with large trade surpluses like China and Germany is still being powered by exports, while expansion in deficit-stricken countries such as the United States is being driven by domestic demand, he noted.

“These global imbalances put the sustainability of the recovery at risk,” he said.

For Asia in particular, Strauss-Kahn warned there were “risks of overheating and even a hard landing”, underscoring the dilemma for policymakers trying to keep a lid on inflation while fostering job-creating growth.

“Food prices are rising too… with potentially devastating consequences for low-income countries,” he added.

10.10.10 it is a vacuum out there.

April 2nd, 2010 ? 7:31 pm @ Dadi

EconomicDisasterArea.com

It is a vacuum out there.

After a year and a half of turmoil and drama, things are sort of in-between at the moment in Iceland. The national referendum and its underwhelming effects seem to have let a lot of hot air out of the system and left things in limbo for now. Sigmundur David Gunnlaugsson is nowhere to be seen, and the Independence Party seems to have adopted a policy of keeping mum to avoid losing the advance it seems to have in the city elections in Reykjavik. Instead the Confederation of Icelandic Employers and the Federation of Icelandic Fishing Vessel Owners have been left to keep the pressure on the government at any step. But still with the foot just lightly on the pedal, as they have promised to step on it in and run the government over in the autumn. Your average Jon and Gunna could care less for now, they are more concerned with eating chocolate Easter eggs and travelling as far away from any news media for the holidays as is humanly possible.

Meanwhile, pressure grows beneath Icelandic society, much like in Eyjafjallajokull where the volcano has been hogging the headlines for the past two weeks.

The story goes that there is a second crash looming and it is due later this year. The more dramatic of those prescient pundits even have a date ready, October 10, 2010.

10.10.10

It is not certain whether Roland Emmerich has a keen interest in Icelandic economic and political matters but the theory goes that by then the indebted households and businesses of Iceland will have been pushed past the limits they are currently operating within. Years of high interest rates and gruelling debt will start to tell for businesses that can only push their liabilities onto their paying customers for so long. Another sign of things being upside down in Iceland is the leftist prime minister Johanna Sigurdardottir promising severe cuts to be made in the bloated government left behind by the right wing politicians from years past.

The national referendum has not delivered what so many hoped it would, and some of us said it wouldn’t, a sympathetic wave across the world for Iceland. Holland and Britain appear to be in no hurry to negotiate a new deal. They can wait for now until Iceland gets its act together in presenting a united negotiating team. Meanwhile the IMF loans are uncertain if you would believe Dominique Strauss-Kahn who said recently that there might not be sufficient support for a loan to Iceland within the fund. Many dare not say so out loud but further IceSave and IMF delays could be disastrous for Iceland come autumn. Read between the lines and Mar Gudmundsson, Central Bank Governor and Jon Danielsson, LSE economist are whispering the unmentionable. Iceland needs to get its act together or expect a turn for the worse.

Iceland’s foreign policy and international relations are in a mess. Apart from the Social Democrats (who want Iceland into the EU), none of the political parties have produced plans to revive and enhance the country’s reputation and standing in the world. The other party in government appears to be on its way to becoming a haven for isolationists and the Independence Party and Progressive Party have yet to provide a credible road map for the country because of internal strife between special interests and ordinary party members. A scared and confused nation seems likely to vote against EU membership, but what will then become of Iceland’s participation in the EEA? With the country already operating under exemptions from the four freedoms through the currency restrictions, what benefits would Europe see in Iceland’s inclusion if the nation does not want to participate with the benefits and responsibilities associated?

Voters are confused for sure. The Best Party, running on a satirical campaign with popular comedian Jon Gnarr looks like it might get two places in Reykjavik City council? Is that alright, asked a political science professor last week? He should be more concerned with the 40% of those who took a stand in the latest poll and want to reward the Independence Party for its work on behalf of FL Group and Landsbankinn in the last few years. And then there are 40% who are undecided! As one political science professor remarked earlier in the winter, people are more interested in politics than before but less interested in politicians.

The economic disaster was a political catastrophe of course. In the aftermath of October 2008, various people were making comparisons with the downturns of Finland and Sweden in the 1990?s and literally said, “in two or three years when we will be on the up again…then”. But comparisons with different countries, different economies, different political landscapes are speculative at best, ignorant at worst. Sweden and Finland ended up in the European Union. There was a political and economic action which took place in those countries. The government has done much more than it is being given credit for but it is up against the wall in so many areas and appears to be crippled in too many ways. Right and left wing nutjobs can still be found who bemoan that while other economies spend their way out of recessions, this government is cutting down, failing to mention that the level of debt in the economy makes it impossible to adhere to “normal” economic laws. Ideological issues such as closing down strip clubs (left wing) and pushing for casinoes (right wing) are given priority over economic and international matters while enough confusion still reigns to avoid a calm and enlightened debate.

Last month I went to my bank and got 2.3 million knocked off the 20 million ISK I owed for my original 16.7 million apartment. Meanwhile a friend got 40 million knocked off the 90 million he owed for his original 45 million currency loan as he sold his apartment for 55 million and is completely off the hook. Another economic law turned on its head, while those who take the largest risks in Iceland reap the highest rewards, the never suffer the biggest losses. The fishing lobby now needs 200-300 billion ISK written down and is ready to do anything it takes to get those write offs without relinguishing the ownership of those who got the industry into such debt.

Maybe 10.10.10 is unavoidable.

World Bank welcomes New Economic Order from the ashes of crisis

October 7, 2009 by admin  
Filed under Featured Stories, World News

Published on 10-05-2009

Source: Observer

The wrenching financial crisis of the past two years will provide the catalyst for a profound change in the global economy – which, according to the man running the World Bank, will see China and India become established centres of power, the dollar eclipsed as the sole reserve currency, and Latin America, south-east Asia and Africa emerge as new sources of growth.

But as he surveys the wreckage caused by what the bank and its sister organisation, the International Monetary Fund, agree is the most severe crisis since the devastation caused by the second world war, Robert Zoellick is surprisingly upbeat about the future.

Asked by the Observer how he envisages the global economy in 20 years’ time, Zoellick says: “There will certainly be a larger role for the emerging powers, there will be multipolar sources of growth, there will be more south-south trade between developing countries.

“The crisis gives us the opportunity to hasten this process. If we are concerned about the past reliance for growth on the US consumer, we have to make sure consumers in developing countries have enough finance to buy.”

Zoellick says that, while this does not mean the end of the US as a big player on the world stage, it has brought the curtain down on the unipolar world that followed the collapse of communism 20 years ago.

Developing countries were on the rise before the credit crunch and, as the latest snapshot of the global economy released last week illustrates, their position has been strengthened by their ability to keep growing as the west teetered on the brink of a 1930s-style Depression.

“We have reached a tipping point in global economic affairs,” says Stephen King, chief economist of HSBC. “While there are some encouraging signs of recovery in the developed world, the real economic action is taking place elsewhere. For both cyclical and structural reasons, the emerging nations are set to dominate world economic activity in the years ahead.”

America, Zoellick says, can no longer rely on the dollar ruling the roost. The euro and the Chinese renminbi are candidates to become reserve currencies.

Tellingly, this year’s annual meetings of the Bank and Fund take place in Istanbul, the point where Europe meets Asia and for almost two millennia a melting pot for cultures and religions. The view of both Zoellick and Dominique Strauss-Kahn, managing director of the IMF, is that there is a discernible shift in power and influence eastwards.

“These annual meetings take place at a defining moment in global governance,” Strauss-Kahn says. “We have experienced unparalleled economic co-operation in the last 12 months. It has never happened in history.”

While noting that there is a risk of the consensus vanishing now the immediate threat of economic meltdown has receded, Strauss-Kahn says it is the will of world leaders to continue collaborating in the years ahead. The days of the G7 – an elite gathering of policymakers from the US, Britain, Japan, Germany, France, Italy and Canada – are over. Power has shifted to the G20, which includes the G7 plus a number of leading developing countries such as China, India, Mexico, Brazil and South Africa.

John Hawksworth, head of macro-economics at PricewaterhouseCoopers (PwC) in the UK, says political influence will result from the increased economic clout of the big developing countries. Within two decades, he says, China may have overtaken the US as the world’s biggest economy once the lower cost of living is taken into account. “The E7 [Emerging Seven] – China, India, Brazil, Russia, Turkey, Indonesia and Mexico – could be a lot bigger than the current G7,” he adds.

PwC estimates that the global economy will double in size by the end of the 2020s to $143tn (£90tn) at today’s prices, with the E7 accounting for almost 40% of GDP and the G7 30%. “The E7 is already not that far behind the G7 and that process has been accelerated by the current crisis, which has hit the developed world harder than the big emerging economies,” says Hawksworth.

Like Zoellick, he thinks the dollar will no longer be the dominant currency. “The dollar, the euro and the renminbi will form a basket of currencies. The world will be different. The recession has accelerated that process.”

The IMF and the World Bank are still set in their original mould, he says. “Voting shares are going to have to change and it will be a gradual process. But it is possible that there will be a Chinese head of the fund or bank by that time.”

Such an outcome would symbolise the changing of the guard. There has been a gentlemen’s agreement that the head of the World Bank should be chosen by the Americans, the single biggest shareholder in the two institutions, while the managing director of the fund is picked by the Europeans. Zoellick is a former US trade representative; Strauss-Kahn was once France’s finance minister.

“There is an inevitability about this [shift in power to Asia],” says Hawksworth. “You can already see it in the business world, as witnessed by the HSBC decision. The centre of economic gravity is shifting and will continue to shift.”

Zoellick says the spread of prosperity to the poor parts of Asia, Latin America and Africa will be accelerated by investment in infrastructure, social safety nets and manufacturing.

Critics say the bank and the fund have too rosy a view of the future. One threat, recognised by the IMF, is that the 3.1% growth pencilled in for 2010 following the first year of global economic contraction since 1945 will prove a false dawn. Once the artificial stimulus of public borrowing wears off, the fear is that a rationing of credit by enfeebled banks will prevent the private sector from taking up the baton.

Another issue is the willingness of the old world to cede power. The IMF and World Bank were set up at the Bretton Woods conference in 1944 and their governance still reflects the dynamics of the 1940s. Reforms are being undertaken, but they are neither radical nor rapid enough to satisfy campaigners.

Peter Chowla of the Bretton Woods Project, a London-based NGO, says the changes amount to a “lick of paint on rotten foundations”.

Finally, there are those who believe the determination of the bank and fund to return as quickly as possible to the high levels of growth seen earlier this decade ignores the elephant in the room – that, by 2029, traditional fossil fuel stocks will be running dry.

Andrew Simms, head of policy at the New Economics Foundation thinktank, says: “One major thing that will describe the landscape in 2029 is that we will be beyond the point of peak oil. That will be the trigger for so many dominoes to fall.” Decisions made in the next few years, he adds, will be critical. “There is the risk of enormous knock-on effects on trade and food supply, with the food price volatility of the last year looking like a vicar’s tea party.”

He believes food security will replace gross domestic product as the yardstick of success, and there will be an emphasis on the new “three Rs” – reduce, repair, recycle.

In one respect, Zoellick, Strauss-Kahn and Simms are in full agreement: decisions taken in the next two or three years will shape the next two or three decades.

“We are balanced on a knife edge,” Simms says. “The potentialities are wonderful; the probabilities deeply disturbing.”1efe163de39bcd1cdf11f2bf28edc64f-grande

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Americans Feel 15.6% Unemployment as Underemployment Surges

April 6, 2009 by admin  
Filed under Economic News, US News

Published on 04-06-2009 Email To Friend Print Version
Source: Bloomberg

Joseph Ramelo gave up searching for work in January to return to school, two months after he was laid off as a San Francisco election clerk. Antonio Poe is struggling to get by doing part-time landscaping in Greensboro, North Carolina, after losing his job as an electrician.

While such workers are feeling real pain from the recession that began in December 2007, they’re not represented in the 8.5 percent unemployment rate the Labor Department reported last week. They are part of a broader group that includes those who want a job but have stopped looking for work and those who want full-time positions but have to settle for part-time employment.

A measure of underemployment that counts those people has almost doubled over the past two years, to 15.6 percent, providing a more complete gauge of the labor market’s deterioration. Along with an historic drop in the percentage of the population who are working, and record numbers of long-term unemployed, the figures point to a permanent shift in employment patterns, said former U.S. Labor Secretary Robert Reich.

“We’re seeing many more people who are losing their connectedness to the labor force,” said Reich, who served in President Bill Clinton’s Cabinet and is now an economist at the University of California at Berkeley. “There is a profound weakening of ties to the labor market among a large portion of our working-age population.”

Job Losses

U.S. employers cut 663,000 jobs in March, bringing losses since the slump began in December 2007 to about 5.1 million, the worst in the postwar era, according to the Labor Department. Unemployment exceeds 10 percent in seven states. Michigan’s jobless rate is 12 percent, South Carolina’s is 11 percent and California’s is 10.5 percent.

Job losses in the current recession are more enduring than in previous ones, according to an April 3 research report by Credit Suisse.

“Permanent job losses are accounting for a much larger share of total job losses than any cycle in recent memory,” with almost half of unemployed workers “job losers” as opposed to temporary layoffs, according to the report.

The number of Americans who want full-time jobs but are working part time has increased 83 percent in a year to 9 million, according to Labor Department data.

Ken Hueser may become one of them. The Minneapolis architect lost his $60,000-a-year position in February and is applying for part-time work at garden centers for $8.50 an hour.

Sooner or Later

“The economy will come back some day, but the unknown is whether it’s sooner or later,” said Hueser.

In the meantime, said Ramelo in San Francisco, “even if I don’t have a job, at least I’ll have my degree.” He returns to his City Hall job temporarily later this month. “At this point, I’m thinking any income will do,” he said.

The increase in temporary workers is the result of a severe recession that coincides with a large drop in household wealth and a lack of access to credit, leaving laid-off workers without the cushion they might have had in a milder downturn, said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. “So people are doing whatever it takes to get some income for their households,” said Feroli.

Lisa Smith, a Trenton, New Jersey, childcare worker who lost her job last September, said she is now willing to take whatever work she can get.

“I would like to work 40 hours a week, but if someone offered me 30 or 35, I’d be glad too,” she said.

More Competition

She and workers like her face greater competition, even for temporary jobs, because more people are out of work for longer periods. There are currently about four unemployed workers for every job opening, according to the Economic Policy Institute in Washington.

The long-term unemployed, those who have been out of a job for more than six months, constitute 24.2 percent of the unemployed, the largest share during a recession since the Labor Department began recording data in 1948.

“This recession is causing extreme desperation and frustration for a very wide swath of workers, even people who thought they were flexible and could find work again easily,” said Andrew Stettner, deputy director at the National Employment Law Project, a New York group that advocates for workers’ rights.

In addition, the downturn is undoing years of gains to overall employment. Beginning in the mid-1970s, the percentage of working-age adults who have jobs began to rise steadily as more women joined the workforce, from about 56 percent in 1975 to 63.4 percent in December 2006. It has since dropped 3.5 percentage points, the steepest decline in any recession since the Great Depression.

That drop has implications for the economy’s potential growth rate, because fewer workers, without a compensating increase in productivity, means less output.

“We’ve taken a huge step back here,” said James Glassman, senior economist at JPMorgan & Co. He said elevated levels of unemployment and underemployment are costing the economy about $1 trillion in gross domestic product a year.

“We’ve lost several decades of progress that was going on in terms of the people number of people coming into the workforce,” said Glassman.

To contact the reporter on this story: Matthew Benjamin in Washington at mbenjamin2@bloomberg.net