'Trilateral' Economies Wait for the Crash
April 6, 2016 (EIRNS)—The United States economy is clearly nearing zero economic growth again, the latest episode in President Obama's "recovery." The Atlanta Federal Reserve's April 5 estimate of GDP growth rate in the first quarter fell to 0.4% from 0.7% one week earlier, because of the very negative durable goods orders and business capital spending data released by the Commerce Dept. April 3. The "official" GDP figure hasn't come out yet, but most other forecasts are in the Atlanta Fed's range.
Meanwhile European economic growth is estimated at 0.4% in the same quarter, the same as in the last quarter of 2015. And Japan, filling out the 'Trilateral' picture, will likely soon announce that it is officially back in recession yet again, with negative growth over the past six months.
The U.S. Commerce Dept. reported April 4 that in February, factory orders fell broadly in the U.S. economy: transportation equipment down 6.25; machinery down 3.4; electrical equipment, appliances and components down 6.85 percent. Overall factory orders fell 1.7%. Some 14 months of the last 17 have seen a month-to-month drop, and orders have been down relative to the previous year, for 16 straight months.
Orders for non-defense capital goods excluding aircraft — the measure of business capital investment—fell by a steeper 2.5% in February.
Combined with the steady fall in manufacturing employment since mid-2015, which accelerated in March to a loss of 41,000 manufacturing and transport jobs—centered in the durable goods industries—it is clear that Obama's "manufacturing recovery" has become its opposite.
Not surprising, then, is a new study by Princeton and Harvard economists on what has become known as the American "gig economy." After barely changing between 1995 and 2005, the share of American workers in "alternative work arrangements"—temps, contract labor, "on-call" workers, etc.—jumped from 10.1% in 2005 to 15.8% in 2015. As economists Katz and Krueger wrote, "All of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements."
That is the significant finding; the total share of people working, who do not have full-time employment—or if they do, are temporary, without benefits or severance rights—is at least 40% according to other studies. "Alternative" in this study was narrowly defined, not to include either part-time workers or those who are self-employed freelancers—but it is still rising fast.