Economist Schunk presents overview of S.C. Labor markets for April

Highlights from April 2009 Data:

• South Carolina’s unemployment rate rose to 11.5% in April from 11.4% in March. Unemployment in South Carolina is now at its historical high (though these data only go back to 1976). The unemployment rate has been climbing steadily since early 2008. While the current level of unemployment speaks to the depth of the current recession, it is also an indicator of longer-term challenges facing the state as we struggle with ongoing sharp job losses within manufacturing.

Aside from being a telling measure of the current situation, the high unemployment rate also has implications for the coming recovery. As the unemployment rate continues to climb in the coming months and quarters, it will place additional strain on consumer spending, further dampening the prospects of a strong recovery.

• Total employment in South Carolina is down 4.5% over the last 12 months. Between April 2008 and April 2009, total employment is down by 88,600 jobs. These losses are widespread across most sectors of the state’s economy, but continue to be centered in manufacturing, construction, retail trade and leisure and hospitality. As with the unemployment rate, the magnitude of job losses serves as an indicator of the depth of the recession, but also serves as a predictor of further pressure on consumer spending as job and income losses continue to mount.

Looking ahead…

While some economists and analysts are starting to suggest that the recession may be over, I do not share that view. It does appear that the worst of the recession is behind us, but what does that mean? During the fourth quarter of 2008 and the first quarter of 2009, the U.S. economy was falling off a cliff. But the recession doesn’t end until we hit the bottom. A recovery doesn’t begin until we start climbing back up. We aren’t “recovered” until we are again standing at the top of that cliff. Right now, the economy is still shrinking, but in many ways we’re not shrinking as rapidly as we were.

Will the economy hit bottom and begin to recover? Yes, and more specifically I expect the economy to hit bottom at some point during the third quarter of 2009 before we begin to recover during the fourth quarter of 2009. The critical question now is “What will the coming recovery look like?” Right now, I expect the coming recovery to be sluggish – characterized by below average economic growth – perhaps for several years.

What leads to this outlook for a sluggish recovery? We need to recognize some important differences between this recession and previous recessions that will work to define the character of the coming recovery. First and foremost, as we come out of this recession, we will be relying on households to lead the way, but they will be doing so in the face of high and rising unemployment. Further, previous recoveries have been characterized by falling savings rates and rising consumer debt levels; just the opposite is true this time around. These factors suggest that the coming recovery will be accompanied by slower than normal growth of consumer spending.

Previous recoveries have often relied on housing and construction to help drive growth. This time around, we are faced with high inventories and home sales that are still declining. This suggests that we may be years away from substantial growth in terms of residential construction. Similarly, business bankruptcies and closures, coupled with years of rapid development in retail and office space, suggests that there will be ample commercial space available. This will again work to dampen new construction as the economy begins to recover. Finally, U.S. manufacturers are generally operating with a large degree of excess capacity. This suggests that we are some time away from a situation where businesses need to substantially expand capacity. This excess capacity will likely work to dampen business investment during the coming recovery.

A recovery is on its way, but we need to be careful as far as our expectations regarding the strength of that recovery.

For additional information, contact: Don Schunk, research economist, dschunk@coastal.edu, 843-655-0995 or 843-349-2485.

Four Rules for Sharing Bad News with Your Children in an Economic Crisis

ou can’t turn on the television anymore without hearing words that make you want to reach for the mute button: economy, recession, layoffs, crisis. You hear them all day at work, too, in the form of rumors and speculation from worried coworkers. And here’s the thing: If you’re constantly immersed in economic anxiety, it’s likely your kids are too. Chances are you’ve already fielded some tough questions: What does “recession” mean? Why did my best friend’s dad lose his job? And maybe even Mom, are we going to have to move out of our house like our neighbors did?

So what is the best way to keep your kids informed without oversharing and creating needless anxiety? Here are four tips from the workplace to keep in mind:

Never say never. When a university management team shared with their employees they would be able to avoid layoffs by cutting jobs through attrition, they lost credibility when the budget worsened and layoffs became inevitable. The lesson? Absolutes backfire. It’s important, with employees as well as with your children, not to make promises that aren’t within your power to keep.

“Never say never to children,” advises Woolf. “For example, you don’t want to say, ‘Mommy will never lose her job’ or ‘We’ll always have our house.’ You may feel certain today, but circumstances can always change, and making these rigid statements will put your credibility on the line. Instead, reassure them with the truth. Tell them that no matter what happens, your family will stick it out together. That’s one promise you know you will always be able to keep.”

Keep quiet until you have specific plans. An executive director of a non-profit organization told her staff that if their big funders discontinued their grants, layoffs were inevitable. Unfortunately, she released this information before she had a plan for handling her employees’ inevitably negative reactions. Questions, which she couldn’t answer, started pouring in: Who would be laid off first? When would there be definite news about the funders continuing their grants? In the end, not having solid information for them further damaged their morale and the director’s reputation. With kids, too, caution should be the rule of the day. If you are thinking about selling your house or relocating for a new job, wait to share the news with your kids until you know as many details as possible.

“Our kids consider what we tell them to be the absolute truth,” warns Woolf. “If you tell them the family might be moving, they will take that to mean that you are moving, and it may cause them unnecessary stress and worry. Children, especially those who are of school age, thrive on consistency. The thought of changing their lives, their home, and their friends, can be traumatic for them. Plus, if the move doesn’t happen, it can be hard for them to process what they are supposed to believe.

“Of course, you have to balance truth and secrecy,” she adds. “If your child asks you point-blank, ‘Mommy, are you going to lose your job?’ tell her, ‘I don’t know yet,’ and then add reasonable reassurance. And don’t wait until the last minute to spring bad news on your kids. Do that and they’ll think you’ve been keeping a secret from them. Be as honest and open with them as often as you can.”

Share a unified message. In the business world, when a management team leaks conflicting information, rumors fly and fear and distrust rise. In one instance, the director of nursing at a hospital leaked that there would be no staff cuts. At the same time, the administrative director shared a less reassuring message—that cuts were unlikely but possible. The mixed messages left staff feeling confused and skeptical. At home, make sure you and your partner are in agreement about what to share and what to keep quiet.

“During any kind of crisis that involves your family, the number one priority should be maintaining the lines of communication between you and your partner,” asserts Woolf. “Make sure that the two of you are on the same page as far as what you will and will not share with the children. And if you have a big announcement, tell your children together to ensure a unified message is conveyed. Seeing the two of you as a unified front will reassure them that you are working together as a family through whatever may come your way.”

Give them something to do to help. One of the worst parts of any crisis is feeling helpless to do anything about it. At the office, employees may be wringing their hands instead of helping to improve your company’s bottom line, simply because they don’t know what they can do. The same is true at home. Children are especially prone to feeling helpless, particularly in an economic crisis that they may not fully understand. Getting them involved will empower them and make them feel better about the situation at hand.

“Explain to your kids that saving money is very important right now,” suggests Woolf. “Then ask them to help you brainstorm ways the family can save money. And give them a money-saving task that is their responsibility, like turning off lights in unoccupied rooms or gathering old toys and making posters for a family yard sale. Get them involved with lowering your grocery bill by clipping coupons together on Sunday afternoons, or having them help hunt for bargains at the store. Not only will they feel good about being involved, but it creates a new way for you to carve out some quality time together.”

“In tough times, it can be easy to focus on all of your problems and end up forgetting how it may be affecting your kids,” says Woolf. “Handling these issues the wrong way can have long-lasting effects on your relationship with them. It may be hard to do, but worrying a little less about your bank account and a little more about your family will do you and your kids some good.
“Remember, while this tough economy is difficult, it also provides us with an opportunity to reevaluate the things in life that truly matter—our families and our children,” she concludes. “Focusing on them instead of the problems plaguing you at work and at home may be the stress reliever you’ve needed all along.”

About the Author:
Jamie Woolf is a regular contributor to Working Mother magazine and founder of The Parent Leader and Pinehurst Consulting, an organization development consulting firm. In her book, Mom-in-Chief: How Wisdom from the Workplace Can Save Your Family from Chaos, Woolf addresses real-life quandaries and covers everything that career-oriented women need to know to unleash their parenting potential and navigate challenges with skill and grace.

DeMint’s rhetoric ignores reality

Op-ed by Carol Fowler

As record numbers of South Carolinians struggle to find jobs and keep their homes, U.S. Sen. Jim DeMint denigrates the efforts of our government to get our economy moving again, and tries to claim freedom as a value unique to right-wing Republicans.

DeMint was one of the opening speakers Friday at the Conservative Political Action Conference in Washington, D.C., sponsored by the American Conservative Union. DeMint, the only U.S. senator to score perfectly on its right-wing agenda, told his listeners to choose their next leader on adherence to their principles.

Let’s start by putting our situation in perspective. We had a budget surplus in 2000 when Republicans took the White House. They set off on a series of misadventures – a war in Iraq, tax cuts for the wealthy and further erosion of regulation. And so it was that last year we watched the economy crash into a ditch.

Voters elected Democrats to get the car back on the road. DeMint and his ilk want to stand on the curb and shout directions to those of us willing to get down in the mud and push.

We will get the economy back on the road, and Democrats believe the market will propel it down the highway. But we will also expect drivers to obey speed limits, and that police will be on the road to protect the law-abiding drivers from the reckless ones. It’s called regulation.

In Friday’s speech, DeMint demonized President Obama “as the world’s best salesman for socialism,” and called for an “enraged” citizenry to take to the streets to stop a “slide into socialism.”
“I am convinced neither the Congress nor the president will preserve freedom,” DeMint said. “Folks, we’re not letting freedom work, but we’re blaming freedom,” he said. “The government is not the answer to our problems. The government is the problem.”

In this, DeMint sounds more like a 19th century anarchist than a supporter of our system of representative democracy. Our freedom is one we choose through elected representatives, a freedom we maintain through law. We the people are we the government.

Outside of the realm of citizens are other powerful forces: other nations and corporations with no national loyalty.

The far right often overlooks how many of our government institutions are designed to protect and foster business. What condition of “freedom” would we have if companies could not enforce contracts by recourse to civil courts, protect their innovations through patents, or raise capital because there was no outside agency such as the Securities and Exchange Commission to verify companies were fully disclosing their financial conditions? Freedom to prosper depends on a structure of justice not just for corporations, but for individuals.

Freedom is something Democrats cherish, too. In 1941 President Franklin D. Roosevelt outlined four of them: freedom of speech and expression; freedom of every person to worship God in his own way; freedom from want and freedom from fear.

Roosevelt was demonized in his own time by those on the right, and in his Four Freedoms speech he offered some advice on dealing with obstructionists.

“We must especially beware of that small group of selfish men who would clip the wings of the American eagle in order to feather their own nests,” Roosevelt said. “The best way of dealing with the few slackers or trouble-makers in our midst is, first, to shame them by patriotic example, and if that fails, to use the sovereignty of government to save government.”

With regard to Sen. DeMint, voters will have that chance in November 2010. Let freedom ring.

Rural Communities Suffer Most Under House Budget Proposal

In a surprising move the South Carolina House Ways and Means Committee decided that the best method for emerging from an economic recession is to raise property taxes, force layoffs, and reduce services necessary for everyday taxpayers and economic development. This crisis will occur if the House chooses to continue down the path set when Ways and Means balanced the state budget by slashing the Local Government Fund. Perhaps not so surprisingly, the House Leadership has decided that rural communities should once again pay the largest price for the state’s continued budgetary mismanagement.

The Local Government Fund is best looked at as the first property tax relief granted to the taxpayers of South Carolina. If funded according to the statutory formula, local governments are sent 4.5% of the last fiscal year’s State General Fund. This provides all counties with a predictable flow of income other than property taxes. Next year, for instance, we know the Local Government Fund will diminish because of the reduction in this year’s General Fund.

This money does not come to counties for nothing. Counties are statutorily required to comply with numerous mandates on behalf of state government. Some of these mandates include the housing of the judicial system, paying for magistrates, and providing office space and supplies for state agencies located in the county. All of these are state functions (indeed the authority over all rests in Columbia) but are funded by county tax dollars.

Clearly, the greatest suffering as a result of the ongoing recession is in rural communities. Many counties are experiencing double digit unemployment, companies laying off employees, and diminishing tax bases. Three years ago, the General Assembly sentenced the rural citizens of this state to second class citizenry as a result of imposing a millage cap caste system. The millage cap states that local governments may not increase the millage more than the consumer price index plus population growth in the county. In communities with lower population, this means that citizens will never enjoy the services available in more rapidly growing communities, even if they are willing to pay for it. With the proposed local government fund cut, the House leadership decided that turning their backs on the rural taxpayers of this state is not enough. They feel that our citizens do not deserve basic services, such as law enforcement, EMS services, and infrastructure maintenance. They want your property tax dollars to increase and go toward funding state functions while cutting those services that local taxpayers want and deserve.

Reeling from the millage cap and the recession Abbeville County, for instance, eliminated an ambulance station and turned it into a “quick response vehicle” station. This means that a truck with equipment and drugs is dispatched and works to stabilize the patient until a transporting ambulance can arrive on the scene. Abbeville has also instituted a one week unpaid furlough, cut four positions from the payroll, and reduced three other positions from full to part-time. The proposed action of the Ways and Means committee means another $660,000 cut from their budget, a cut that will put taxpayer lives at risk.

My constituents in Saluda County will lose $485,110 as a result of this cut. This is the equivalent of 9.88 mils. The millage limitation this year for Saluda County will likely be 3.9, which means, assuming county council raises taxes to the maximum extent allowed, we could make up $191,427. The remaining $293,683 will need to be stricken from an already lean budget utilizing either a reduction in force, furloughs, elimination of services or a combination of all three.

The result of cutting the Local Government Fund is apparent. Local governments are limited by a millage cap created in 2006 when the General Assembly, awash in cash, implemented a sales tax for school property tax replacement. At the same time they decided to emasculate local government fiscal authority by limiting millage increases to CPI plus population growth. Clearly, as a result of this measure, all local governments will be forced to increase millage to the maximum allowed under the limiting statute. In wealthy, populous communities, perhaps like those in the House leadership, taxpayers will see the taxes on the homes and cars skyrocket with some service loss. However in rural communities, already battered as a result of the General Assembly’s millage cap, this action will result in higher taxes, the slashing of local services, and most likely layoffs and furloughs in rural local governments. It is my hope House members who represent constituencies like mine will not once again succumb to the House leadership, but instead will save our taxpayers from the ruthless pillaging these actions represent.

By T. Hardee Horne, Chairman of Saluda County Council and a member of the Board of Directors of the South Carolina Association of Counties

Eating Healthy on a Budget

The Healthy SC Challenge is the Sanford family's effort to get all South Carolinians to do just a little more to live a healthier lifestyle. The tips are designed to encourage individuals and communities to live healthier lifestyles in three categories - nutrition, exercise and help to quit smoking.

Nutrition
Does feeding your family a healthy diet have to break the bank? Not if you know how to do it. Start by adding up the cost of all the food that your family eats away from home each week. Include lunches in the cafeteria, coffee breaks, sodas, vending machine purchases and meals eaten in your car or a restaurant. Then think about how much money you could save by eating more meals at home, carrying snacks with you, brown-bagging lunches and changing favorite recipes. Here are a few tips:

Avoid buying liquid candy like soda, lemonade, sweet tea, sweetened juice, energy drinks and fancy vitamin drinks. These options are not as healthy as a glass of water and a piece of fruit. In addition, the cost really adds up. Just two sodas or juice boxes every day can have a monthly cost anywhere from $15 if brought at the grocery store to as much as $120 if bought at restaurants and convenience stores. Avoid bottled water, too. It is very expensive since it is mostly just tap water. Save money by buying a water bottle for each person in the family-then fill it with your own water, keep it cold and ready to go.

Do not buy boxed cold breakfast cereal. Boxed cereals usually cost between $3 and $4 per box, and contain mostly refined grains mixed with sugar. And - have you noticed recently that you are getting less cereal for the same cost? Instead, buy other breakfast foods like 100% whole-wheat bread or English muffins for toasting, plain oatmeal, plain grits or big bags of store-brand whole grain cereals like O's or bran flakes. Add your own raisins or chopped nuts.

Go out to eat less often. Eating at home just one more time per week can often save $100 or more a month. Fixing food at home can be cheaper and quick, and allows you to make things that your family likes. Foods like grilled-cheese sandwiches, whole grain pancakes or scrambled eggs can be on the table fast, and are healthier than most fast-food meals that are typically high in calories, salt, fat and sugar. One way to avoid eating out: carry snacks like raisins, cereal Os or apples in the car to keep appetites under control until you get home.

Pack lunches for school and work. Fill lunch boxes in the morning quickly and easily with already prepared food. Sandwiches can be made for the whole week, and then frozen in small plastic bags. Oatmeal cookies, banana bread or muffins can be baked in large quantity and frozen in individual portions. A big bag of carrots, peeled and sliced to create a 2-3 day supply, can be ready to pop into a plastic container with a little ranch dressing for dipping. By adding a piece of fresh fruit or frozen fruit in a small plastic container, you can create a lunch that is fast, cheap and healthier.

Buy fewer single serving pre-packed foods. Avoid things like 100-calorie bags of cookies, granola bars, "fruit" chews, crackers, pudding, yogurt tubes, cheese, canned fruits, gelatin cups, applesauce, pre-boxed lunches and juice boxes. You pay a premium for someone else to stick these products in a bag or container for you. Invest in inexpensive, reusable, lidded containers and pack your own. Chances are that what you pack will be healthier, too.

Look for fresh fruits and vegetables on sale. Stores often have specials on produce that is in peak production. That means the fruit or vegetable is "in-season" and will be extra fresh and flavorful-as well as less expensive. When farmer's markets open in your area, you can get fruits and vegetables right out of the garden at even lower prices. Or, you can even plant your own tomatoes or cucumbers.

Watch for canned, dried and frozen fruits to go on sale and stock up. They keep for months and help you get a simple meal on the table fast. Be sure to stock up on basics like pasta sauces and frozen vegetables during sales when you can.

Consider making your own food. Muffins, cookies, instant oatmeal, granola bars, rolls, pizza dough, pudding, and salad dressings can be quick to make. The ingredients in these foods cost very little- and when you make them yourself, they can be much healthier. Be sure to use at least half whole-wheat flour, and add extra powdered milk, chopped nuts, dried fruit, and healthy fat (like olive or canola oil) to make them even healthier.

Eat less meat. Some old-fashioned basic meals like meat loaf, stew, soups, chili beans, pasta casseroles, or spaghetti use less meat because they contain other healthy ingredients. Grandma or older friends can be great resources for these old-fashioned "stretch the dollar" recipes. Update these old favorites to meet current nutrition standards by cutting the meat in half, and adding healthy extras to the recipe like vegetables (frozen peas, grated carrots and corn are kid favorites), beans, brown rice or whole grain pasta.

Have beans as your main course at least once a week. Kids and adults do not need meat every day. Beans are cheap and super healthy. Canned beans are great, but get rid of extra sodium by rinsing them with running water. Dry beans are even cheaper; just remember to soak them for a few hours before cooking. Quick bean meals include red beans and rice, black-eyed peas on rice, bean soup and baked beans.

Avoid foods with health claims on the label. These foods usually offer fewer benefits than cheaper brands. You can get much more nutrition from eating a great variety of less expensive foods. Remember that the word "organic" on the label does not mean "healthy," and many packaged organic foods contain unhealthy amounts of fat and sugar. Non-organic foods still contain most of the vitamins, minerals, fiber and protein found in organic choices. If you want to limit your family's exposure to pesticides and herbicides, one low-cost strategy is to scrub your conventionally grown fruits and vegetables very well with water.

Eating at home is not just great for the pocketbook and health-it is wonderful for children. Learning kitchen survival skills will help kids to grow up knowing how to care for themselves and enjoy healthier foods. Many children like to help the kitchen, and have fun doing tasks like setting the table or chopping vegetables for a salad. Cooking at home can be combined with the best idea ever for getting the whole family to eat more vegetables: serve some raw veggies for munching while the family cooks and talks together in the kitchen.

-EllieTaylor, RN, MS; South Carolina co-author of Feeding the Kids: The Flexible, No-Battle, Healthy Eating System for the Whole Family (2007) and Feeding the Kids Workshops: Raising Happy, Healthy Eaters (2009)

Slap a CEO!

A Web entertainment company has launched an online videogame called "Trillion Dollar Bailout" which allows players to "slap" or reward CEOs and hand out bags of money to deserving homeowners.

Players of the game, created by AddictingGames.com, are given one trillion play dollars with which to "rescue the US economy before total economic meltdown strikes."

In the game, homeowners and corporate CEOs pop out of a New York City skyline requesting taxpayer-funded handouts -- such as the eight billion dollars requested by "Crysalot Motors."

Players can either hand out money by clicking on a money bag icon or give the person requesting a bailout a slap by clicking on an icon which looks like a hand.

The player's actions are charted on a graph and determine whether the economy is "saved" or "tanks."

The game's creators urge players to "punish greedy fat cats and save honest people" and "put the hurt on dudes in suits!"

Here's the link. It takes a minute to load.

Media General Announces Employee Furlough Program

Richmond, Va. – Media General, Inc. (NYSE: MEG) announced that it is implementing an employee furlough program in the face of an economy that continues to contract, causing the advertising market to further weaken.

Note: Media General owns WBTW News 13, The Morning News, The Hartsville Messenger, The Lake City News & Post, The Marion Star & Mullins Enterprise and The Hemingway Observer.

Employees will take a mandatory 10 days off according to a schedule that requires four days by the end of March and three days each in the Company’s next two fiscal quarters, ending in June and September, respectively. Unionized and other employees under contract are being asked to participate in lieu of layoffs.

“The current economic outlook requires us to be even more cautious than we already have been regarding our revenue expectations,” said Marshall N. Morton, president and chief executive officer. “Despite aggressive sales initiatives and significant cost reductions already implemented, we need to build in additional expense savings to offset the revenue shortfalls we anticipate.

“With this furlough, along with other cost reduction measures already implemented, we are being prudent and proactive as we address the impact of unprecedented economic turmoil in our country and our industry,” said Mr. Morton.

In January, Media General announced that it is suspending the company’s matching contribution on its 401(k) plan effective April 1, 2009, through the end of the year, and the Board of Directors suspended the dividend on its common stock. These actions, together with the furlough, will provide an additional $28 million in 2009 for debt reduction.

Avoiding a Liquidity Trap

By E. Ralph Hostetter

The Federal Reserve Bank, in another effort to stimulate the nation's economy, reduced its target range for overnight interest rates from zero to 0.25 percent, the lowest level on record. Reductions in Fed rates are reflected in lower bank rates across the nation. As expected, stock markets have reacted positively overall.

Waiting in the wings may be less good news. Zero-percent interest rates may sound great but they invariably carry very dangerous, unintended consequences, one of which is a condition known as a liquidity trap. The classic definition of a liquidity trap is a condition that occurs when the nominal interest rate is close to or equal to zero. At the zero point, the monetary authority, in this case the Federal Reserve, finds itself unable to stimulate the economy.

Normally, the Federal Reserve can stimulate the economy by lowering interest rates or increasing the monetary base. These actions in turn increase borrowing and lending, spending and investing. However, with interest rates near zero, the Federal Reserve can no longer lower rates to stimulate the economy.

The Federal Reserve is left with one choice: to print more money. The money must now find its way into the economy. Traditionally, this course is through the banking system. However, in a liquidity-trap environment with banks unwilling to lend — as in the case of Japan in the 1990s, where new money went into bank reserves — the newly created liquidity is trapped behind unwilling bank lenders, thus forming the liquidity trap.

Traditionally, the Federal Reserve Bank uses interest rates as one of its monetary tools to stimulate and influence conditions involving the flow of currency. Reductions in interest rates traditionally have created a flow of cash to provide liquidity as banks with cash surpluses make available money for other banks to borrow to improve their balance sheets.

Such transactions virtually have disappeared as lending banks became more aware of problems which may exist on the balance sheets of borrowing banks. Consequently, lending banks are hoarding their cash rather than taking risks.

With the economy entering an uncertain period, other potential problems are arising. Property values are declining. The Department of Labor reported consumer prices dropped 1.7 percent in November 2008, the largest one-month decline in 61 years — since February 1947. According to the Department of Commerce, new home construction was down 18.9 percent in November, the biggest drop since March 1984. Consumer spending is down, particularly on big-ticket items such as automobiles, appliances and electronics. Unemployment has reached 6.7 percent. Job losses totaled 533,000 in November alone.

The risk of deflation has appeared. None of these warning signs has escaped the attention of Ben S. Bernanke, Chairman of the Board of Governors of the Federal Reserve. One could say the present situation is his “cup of tea.”

Described as a student of the Great Depression of the 1930s, as well as of Japan’s lost decade in the 1990s, he is aware of the risks and rewards presented by zero percent interest rates and the resulting liquidity trap. In a paper delivered in 1999, then-Professor Bernanke offered a remedy to the government of Japan, advancing the theory that a “more expansionary monetary policy was needed.” Under what is known as “a policy of quantitative easing,” the banking system of Japan was flooded with money with the aim of easing pressure on banks, persuading them to start lending again and stop a downward spiral in prices.

Since mid-September 2008, as Chairman of the Fed, Bernanke has followed his own advice here in the United States. He has ordered the printing of billions and billions of dollars and has pumped them into the financial system of the country.

The nation awaits the results of Chairman Ben Bernanke’s bold attack on the recession.

E. Ralph Hostetter, a prominent businessman and publisher, also is an award-winning columnist and Vice Chairman of the Free Congress Foundation Board of Directors.

Progress Seen Despite Turbulent National Economy

The North Eastern Strategic Alliance (NESA), an economic development organization encompassing South Carolina’s northeast region, has had several pockets of economic success despite the turbulent regional and national economy, according to the newly released 2009 Economic Outlook.

Though in the near-term, the NESA region and the State of South Carolina will face challenges as a result of the global economic slowdown, the report, put together by Drs. Donald Schunk of Coastal Carolina University and Jonathan Munn of Francis Marion University, clearly lays out the economists’ belief that the NESA region will rebound from the current recession.

“While every recession is different, the one constant is that they all end with economic expansion,” the report states.

The report shows that NESA enjoyed “an increase in overall employment with a net increase of roughly 28,000 jobs” over the past decade. In addition, the NESA region’s per capita income increased at a 4.1 percent average annual rate, for a total increase of almost $8,000 from 1997 through 2006 -- rate of growth that was “on par” with the rest of the State, according to the report.

Similar to the rest of South Carolina and the country, the NESA region has suffered from a slump in the housing market that precipitated the present economic downturn, the report states. However, there are pockets of success even in this troubled industry, such as the Florence MSA which “has seen an increase in the number of building permits issued,” and shows a trend of “steady, positive growth for single family dwellings.”

“On the industrial side, we continue to see some very solid inquires into our area and we feel that this is driven by our competitive business climate,” said Jeff McKay, NESA’s Executive Director. “In today’s economy, companies are being forced to map out business strategies that allow them to take advantage of cost savings in order to remain competitive and sustain their businesses. In our region, we can certainly help them meet those challenges.”

“As long as we do not allow ourselves to lose sight of our long-term goals, we will be well prepared to take advantage of the opportunity that will be presented when the economic pendulum swings back in a positive direction,” McKay said.

The North Eastern Strategic Alliance (NESA) is a regional economic development organization that serves a nine-county region in the northeast corner of South Carolina. NESA’s primary objective is to significantly enhance the quality of life for residents of the region by creating additional jobs and capital investment within the existing industry base as well as through recruitment of new companies and expansion of tourism related development. NESA’s nine member counties are Chesterfield, Darlington, Dillon, Florence, Georgetown, Horry, Marion, Marlboro and Williamsburg.

Budget Busters

President-elect Barack Obama is warning the U.S. deficit will top one trillion dollars this year, leading to what he says could be extensive cuts to government budgets. Obama made the warning Tuesday as he meanwhile prepares an economic stimulus package that will cost almost the same amount.

View a report from Democracy Now on the topic here.

Great Depression II?

From Alternet.org

Milton Friedman, in particular, persuaded many economists that the Federal Reserve could have stopped the Depression in its tracks simply by providing banks with more liquidity, which would have prevented a sharp fall in the money supply. Ben Bernanke, the Federal Reserve chairman, famously apologized to Friedman on his institution’s behalf: “You’re right. We did it. We’re very sorry. But thanks to you, we won’t do it again.”

It turns out, however, that preventing depressions isn’t that easy after all. Under Mr. Bernanke’s leadership, the Fed has been supplying liquidity like an engine crew trying to put out a five-alarm fire, and the money supply has been rising rapidly. Yet credit remains scarce, and the economy is still in free fall.

Friedman’s claim that monetary policy could have prevented the Great Depression was an attempt to refute the analysis of John Maynard Keynes, who argued that monetary policy is ineffective under depression conditions and that fiscal policy -- large-scale deficit spending by the government -- is needed to fight mass unemployment. The failure of monetary policy in the current crisis shows that Keynes had it right the first time. And Keynesian thinking lies behind Mr. Obama’s plans to rescue the economy.

But these plans may turn out to be a hard sell.

Will the government do enough to put the brakes on the sliding economy? Is it too late even if they come up with a big enough plan? Should the government keep its hands off and let the market do its bellyflop?

If you want to learn more about Milton Friedmanism, check out Naomi Klein's book The Shock Doctrine.

A Different Take on the Upside of the Downturn

Say Hello to the Thrift Zeitgeist

By Ellen Goodman

It read like a manifesto for the new zeitgeist, a signpost for an America decking the halls with boughs of thrift and singing carols to the values of frugality:

“Perhaps it will be different now. Perhaps now is an opportunity to reassess what really matters. After all, if everything you ever bought her disappeared overnight, what would she truly miss?”

How charming. What a tribute to the collapse of consumerism, the one upside to the economic downside. The only problem was that this little gem of thoughtfulness was an ad for diamonds.

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Now, competitive consumption has been replaced by contagious anxiety. Buying hit the wall with the housing collapse, the stock market plunge, the credit card crunch and the surge in unemployment figures. “Thrift is the new normal.” “Sixty percent off is the new black.” Cutting back is in. Retail therapy is out.

Senator Shane Massey Will Not Accept Pay When Legislature Returns for Budget Talks

Today the Board of Economic Advisors announced that the state must trim 6%, nearly $420 million, from the annual state budget. Senator Shane Massey told WRDW (CBS-Augusta) that he will refuse pay when the legislature returns to debate those cuts.

Massey says, “if lawmakers are called back, it would cost somewhere around $50,000, and I for one will not be accepting any pay. This is a problem that everyone needs to fight together.”

The full WRDW story can be found here.

Cynthia McKInney on the Bailout

Points for Congressional action immediately in the wake of the financial crisis now gripping our country:

1. Enactment of a foreclosure moratorium now before the next phase of ARM interest rate increases take effect;
2. Elimination of all ARM mortgages and their renegotiation into 30- or 40-year loans;
3. Establishment of new mortgage lending practices to end predatory and discriminatory practices;
4. Establishment of criteria and construction goals for affordable housing;
5. Redefinition of credit and regulation of the credit industry so that discriminatory practices are completely eliminated;
6. Full funding for initiatives that eliminate racial and ethnic disparities in home ownership;
7. Recognition of shelter as a right according to the United Nations Declaration of Human Rights to which the U.S. is a signatory so that no one sleeps on U.S. streets;
8. Full funding of a fund designed to cushion the job loss and provide for retraining of those at the bottom of the income scale as the economy transitions;
9. Close all tax loopholes and repeal of the Bush tax cuts for the top 1% of income earners; and
10. Fairly tax corporations, denying federal subsidies to those who relocate jobs overseas repeal NAFTA.
11. Appointment of former Comptroller General David Walker to fully audit all recipients of taxpayer cash infusions, including JP Morgan, Bear Stearns, Fannie Mae, Freddie Mac, and AIG, and to monitor their trading activities into the future;
12. Elimination of all derivatives trading;
13. Nationalization of the Federal Reserve and the establishment of a federally-owned, public banking system that makes credit available for small businesses, homeowners, manufacturing operations, renewable energy and infrastructure investments; and
14. Criminal prosecution of any activities that violated the law, including conflicts of interest that led to the current crisis.