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Unemployment: Barrier to the American Dream

Unemployment: Barrier to the American Dream. Waste of Resources, Threat to Well-Being & Identity Causes of Unemployment Barriers to wage adjustment? Demand-side economics: aggregate demand and jobs Recent History of Demand Generation Household spending, debt, and the Great Recession crisis

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Unemployment: Barrier to the American Dream

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  1. Unemployment: Barrier to the American Dream • Waste of Resources, Threat to Well-Being & Identity • Causes of Unemployment • Barriers to wage adjustment? • Demand-side economics: aggregate demand and jobs • Recent History of Demand Generation • Household spending, debt, and the Great Recession crisis • Role of income inequality • Foreign “Theft” of Jobs? • Problems of a Stagnant Middle Class

  2. Simple Labor Market: Wages and Unemployment Wage Labor Supply Unemployment W’ W* Labor Demand Employment E’ E*

  3. Rising Household Financial Fragility: Household Debt to Disposable Income

  4. Real Household Demand (2009 $) Trend – Actual 11.6% 12.3% 13.2% 14.1%

  5. Something Changed …Current & “Vintage” Output Gap (Based on 2007:2 CBO Y* Estimates)

  6. Top Income Shares (5%)(Pre-tax, including realized capital gains – World Top Incomes database) Increase: 16 Percentage points

  7. Unstable Financial Dynamics Concentrated in Middle Class(Debt to Income Ratio by Income Group)

  8. Who Cut Back in the Crisis?(Consumption to Disposable Income by Income Group)

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