People's Daily, China
American Economy and Employment
Over the Past Ten Years
By Dong Qing
Translated By Crystal Jin
3 January 2010
Edited by Jessica Boesl
China - People's Daily - Original Article (Chinese)
The American economy had been growing steadily every decade since World War II, but in 2000 it took a sudden turn for the worse. The Washington Post checked American economic data over the last decade and found that an improved rate of paid employment, total GDP, median household income and family assets had been the worst in about 7 decades. These ten years since the new millennium have been “a sad ten year period” for the American economy and employees.
In 1999, the American economy was good and some economists thought that recession would not come to America again. But during the first ten years after 2000, America was hit by recession twice and the range of economic growth has been the worst since the 1930s.
According to statistics, since the 1940s, paid employment increased by 20 percent every year in America, but between December 1999 and the end of last year, it did not grow at all. Furthermore, inflation aside, the median income of American households decreased for the first time in the past 10 years, according to records that have been kept since the 1960s. Family assets also dropped for the first time since the 1950s.
On one hand, it is because the American economy was at its height, setting a rather high precedent for the years followed; on the other hand, the bubble of the real estate market and consumption was out of control, which hindered the substantive economy in the long term. The chief economist and executive vice president for Global Insight pointed out that “the problem is that we mismanaged the macroeconomy, and that got us in big trouble.”
The bulge in mortgage was the main cause of the economic bubble. In 2008, gross liabilities of American families had risen by 117 percent since 1999, and it was the same in the commercial property market and the finance market. According to some reports, America spent the years since 2000 proving what the result would be if an economy depended too much on loans. As a result, financial crisis swept the whole world, causing joblessness to rise up to 10 percent.
According to some reports, this millennium could be a good lesson for economists and policy makers, allowing them to better understand how to manage economies. The Federal Reserve System should know that not only specific organizations should be subject to financial supervision, but also that the financial system affects the whole economy, so risks should be paid attention.
How to prevent the economic bubble from growing again is the most important task for Obama's government now. With this goal, the government has been devoting itself to the improvement of the financial system, investing in clean energy and other fields. Just like Obama said in November last year, the challenge for now is how to get what we call a post-bubble growth model; one that is sustainable.
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