U.S. Economic/Financial News
American Civil Engineers: U.S. Needs Massive Upgrade of Infrastructure
The U.S. "must adopt a coordinated national approach" to repair and develop its crumbling infrastructure, whose condition has continued to decline since it was graded "D+" in 2001, the American Society of Civil Engineers warned Sept. 4. If America fails to invest in its deteriorating transportation, water, and energy systemsinfrastructure which previously had "long set the standard for the world""anything" could happen, cautions ASCE in its 2003 "Progress Report" for America's infrastructure, as Congress reconvened.
The dire report is a follow-up to ASCE's 2001 "Report Card" which graded 12 infrastructure categories at a discouraging D+ overall, and estimated the need for a $1.3-trillion investment over five years, to bring conditions to acceptable levels. Since then, conditions "continue to decline" for the nation's roads, transit, energy, drinking water, wastewater, dams, and navigable waterways, even as demand is increasing, ASCE found. In addition, there was "no progress" in the condition of bridges, aviation, schools, solid waste, and hazardous waste. As a result, the cost to repair and expand infrastructurethe "foundation for our economy"has risen to $1.6 trillion over a five-year period, ASCE estimateseven as terrorism hype has diverted funding for maintenance and growth, to implement security measures.
Federal action is urgently needed, ASCE insists, not only for Congress to pass legislation to provide critical funding to repair and upgrade infrastructure; but, to create a "long-term infrastructure agenda" for the nation. "We must adopt a coordinated national approach," urged ACSE president Thomas Jackson, "to the development and maintenance of our infrastructure." He called on Bush to appoint a new Federal commission "to develop America's infrastructure agenda for the 21st century."
"The time to act on infrastructure investment is now," said Rep. James Oberstar (D-Minn), the ranking Democrat on the House Transportation and Infrastructure Committee, at the ASCE press conference.
Here are some of the findings of the ASCE report:
*ROADS & BRIDGES. 2001 Grade: D+/C. 2003 Trend: Declining/No Progress. In a dangerous trend, "the nation is failing to even maintain the substandard conditions we currently have." As of 2000, more than one-quarter of the nation's bridges were classified as structurally deficient or functionally obsolete.
*TRANSIT. C-. Declining. Transit systems, such as Amtrak, are "in peril," showing "signs of decline," even as public transportation ridership is increasing.
*AVIATION. D. No progress. Although the FAA expects dramatic growth in passenger and cargo air travel over the next decade, airport officials are spending funds on security measures instead of infrastructure.
*SCHOOLS. D-. No progress. A whopping 75% of our nation's school buildings remain "inadequate."
*DRINKING WATER. D. Declining. "The situation continues to worsen as aging systemssome developed more than a century agocontinue to service our ever-growing population."
*WASTEWATER. D. Declining. America's 16,000 wastewater systems face "enormous" needs, as some sewers are 100 years old and many treatment facilities have exceeded their recommended life expectancy.
*DAMS. D. Declining. The number of unsafe dams has jumped by 23% to nearly 2,600, posing a direct risk to human life should they fail.
*SOLID WASTE. C+. No progress. U.S. lacks an efficient management system for growing electronic waste.
*HAZARDOUS WASTE. D+. No progress. The clean-up rates of brownfields and Superfund sites, are not able to keep up with the rate at which new sites are identified.
*NAVIGABLE WATERWAYS. D+. Declining. In "urgent need of modernization" to meet present and future levels of waterborne traffic. Half of the navigation locks on inland waterways exceed their 50-year design life, while key deep-draft channels at gateway ports are inadequate for mega-container ships.
*ENERGY. D+. Declining. Annual transmission investment has plunged by 60% from 1975 to 2000.
Statistical Fakery and Defense Spending Provide 'Increase' in U.S. GDP
On July 31, the Commerce Department delivered the "good news" that the U.S. recovery had already started in the second quarter. According to the highly sophisticated way the Commerce Department calculates GDP, economic activity in the U.S. was rising by an annualized 2.4% in the second quarter. This was just the "advance" assessment. In its "preliminary" report, released on Aug. 28, the government's data manipulators even produced a 3.1% growth figure. And this was only the beginning. In discussions with Japanese business leaders on Sept. 1, U.S. Treasury Secretary John Snow stated that U.S. GDP will most likely grow by 4% or more during the third quarter. Certain investment bankers are already speaking about GDP growth rates of up to 7% for this quarter.
However, all of this hype is based upon two factors: a rapid increase in defense spending, and an extremely crude form of statistical fakery. First, the 3.1% figure is "annualized," which means that GDP only increased by about 0.8% during the second quarter. In absolute terms, GDP increased by an annualized $78.1 billion as measured in "chained 1996 dollars." More than half of that increase stems from national defense spending, which went up by $40.6 billion to $450.3 billion.
The remaining part of the GDP increase was generated by using the so-called "hedonic pricing" method, a highly complex and arbitrary way of calculating "quality adjustments." In any case, the method is very effective. While annualized computer sales increased from $76.3 billion in the first quarter to $82.6 billion, the computer sales "in chained dollars," that is, after taking into account all sorts of adjustments, increased from $319.1 billion to $357.5 billion. By using the "hedonic" method, the Commerce Department has actually quadrupled the volume of computer sales, and has even pumped up the increase in computer sales by a factor of six, that is, from $6.3 billion to $38.4 billion.
Without the increase of defense spending from an already record-high level, and without the "hedonic" ballooning of computer sales, the U.S. GDP would have increased by a tiny $0.8 billion, equivalent to a growth rate of 0.008%. Going back to the "advance" assessment, the same procedure would lead even to a shrinking of GDP during the second quarter.
Most Job Losses Since 2001 Are Permanent, Says N.Y. Fed
While the Administration peddles its "recovery" hoax, and President Bush on Sept. 5 insisted that continuing job losses are only a "short-term problem," the systemic nature of the economic collapse was acknowledged, albeit obliquely, in a study released Aug. 28 by the Federal Reserve Bank of New York, written by Erica Groshen (an assistant vice president), and Simon Potter (a senior economist). An overwhelming majority of the 2.7 million jobs lost since 2001 will not come back, the authors found, because of "structural" changes in the economy, as industries decline and eliminate jobs.
As evidence, they note that permanent layoffs vastly outnumbered temporary layoffs, many through outsourcing. Many of the lost jobs, in addition, were "permanently relocated" to other industries or sectors of the economy. "Most of the industries that lost jobs" since 2001, they wrote, "are still losing jobs," giving "persuasive evidence" that the economy is undergoing a structuralnot cyclicalshift.
Firms, in a Hobbesian drive to cut costs, have seen the collapse as "an opportunityor even a mandate"to move overseas, shut down facilities, and "cull staff," they write.
93,000 Jobs in Disappear in August; 265,000 Workers Dropped from Labor Force
U.S. employers slashed 93,000 non-farm payroll jobs in August; yet official unemployment slid to 6.1%, as 265,000 workers were dropped from the labor force, the U.S. Labor Department's Bureau of Labor Statistics revealed Sept. 5. The largest monthly net job loss since March, brings the total number of job cuts since January to 595,000. Manufacturing had a net loss of 44,000 jobs in August; since July 2000, factory employment has fallen continuously, shedding nearly 16% of its jobs.
"The armchair experts who say this is just another cyclical downturn, are in a dream world completely out of touch" with reality, said Jerry Jasinowski, president of the National Association of Manufacturers.
Employers Announce 795,574 Job Cuts in First Eight Months of 2003
During January-August, U.S. employers announced plans to slash nearly 800,000 more jobs, a staggering figure, even though it is down 15% from the level in the first eight months of last year, according to Bloomberg Sept. 3. Job-cut announcements in August totalled 79,925, down slightly from the 85,117 reported in July, according to Challenger, Gray & Christmas, a Chicago placement firm. Leading the pack, telecommunications companies in August announced plans to drop 18,739 jobs; government and non-profit organizations, 6,921 job-cut announcements.
Manufacturing Production Rises as Employment Continues To Collapse
The Institute for Supply Management announced Sept. 2, that its manufacturing index for August rose to 54.7 from 51.8 in July, as production reached the highest level since June 1999. But somehow, manufacturing employment kept right on collapsing59,000 more in July, the 34th straight month of contraction. Moreover, the 3 million jobs lost are not coming back, despite the supposedly booming recovery.
Why? China, of course: everyone's favorite excuse these past weeks for the collapsing world economy. Our manufacturers have to trim down the workforce to compete with the unfair Chinese who refuse to let the yuan float, explains the ISM.
The ISM does, at least, admit that the "recovery" is not sustainable, if employment does not pick up.
Power-Grid Workers Speak Out vs. Deregulation
The deregulated trading system in electricity has "complicated our job tenfold," a power-grid operator told the New York Times Sept. 2. There is increasing strain on the shrinking workforce responsible for managing a grid which is fed electricity from increasingly distant and irrationally coordinated sources.
The operator, speaking anonymously, said, "Things have gotten extremely intense compared to the way it was, say, 10 years ago. We're facing people out there who are strictly power marketers. They really don't care too much about the reliability. They get their bonuses based on the size of the deals they make."
Veteran operators have been phased out or retired early under cost-cutting programs.
James L. Dushaw, utility-division director of the International Brotherhood of Electrical Workers, said "The culture used to be 'Keep the lights on.' There was a duty, a responsibility, a pride that existed. That is very hard to maintain under the pressures that are here now."
35 Million Americans Living in Deep Poverty
The U.S. Census Bureau's monthly "American Community Survey," released Sept. 3, shows that the number of American living in poverty rose by more than 1.3 million last year, to 12.4%, from 12.1% in 2001, and totalled a shocking 34.8 million.
The adjusted poverty-line figures for 2002 have yet to be announced. In 2001, a family of two children and two adults would have to have made less than $17,960 to be ranked as below the poverty level. For a single person under the age of 65, the poverty line in 2001 was roughly $9,200 a year.
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