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What do we know, what have we learned? Michigan, US, and Obamanomics

What do we know, what have we learned? Michigan, US, and Obamanomics. Jared Bernstein Economic Policy Institute MLHS Annual Meeting jbernstein@epi.org. Real Economy, macro. It’s official—recession, that is…but you knew that. Consumer: retrenching, big time.

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What do we know, what have we learned? Michigan, US, and Obamanomics

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  1. What do we know, what have we learned? Michigan, US, and Obamanomics Jared Bernstein Economic Policy Institute MLHS Annual Meeting jbernstein@epi.org

  2. Real Economy, macro • It’s official—recession, that is…but you knew that. • Consumer: retrenching, big time. • Investment: squeezed on credit and profit sides • Exports/Imports: Maybe, maybe not… • Government: most reliable source of short term growth?

  3. Source: Bureau of Labor Statistics, EPI Employment Projections

  4. Employment Declines Across Sectors Source: Bureau of Labor Statistics

  5. Source: Bureau of Labor Statistics

  6. Source: Bureau of Labor Statistics

  7. Source: Bureau of Labor Statistics

  8. Source: Bureau of Labor Statistics

  9. Source: EPI analysis of Census Bureau data

  10. Source: EPI Analysis of BLS data and Goldman-Sachs unemployment rate forecasts

  11. Source: Mark Zandi, Moody’s economy.com

  12. Source: Mark Zandi, Moody’s economy.com

  13. Un-Real Economy • Financial Markets: Dow, Nasdaq, S&P 500, Russell 2000…all down about 40% ytd. • But: good news…”Ted Spread” responding • Housing: some signs bottom in sight, but no signs re uptick…prices still falling…inventory overhang; • TARP: Certainly not a confidence builder yet. • Fed: pushing on string but not giving up.

  14. 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 ain’t it. • Middle-class, poor, labor agenda (EFCA, min wg, UI reform, OSHA, etc…)

  15. Their Agenda • Morph his recovery package with House D’s (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)

  16. What Have We Learned? • Markets • Ineq • Public investment • No more TBTF • Financial markets

  17. Learned…cont. • Budget priorities • Supply-side • Amply funded gov’t • Shampoo economy • Better economists

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