1、“Its the Economy, Stupid!”,Characteristics,US economy = highly developed + integrated Major sectors Sales Manufacturing Finance Health Care Construction Technology Consumer spending + gov health care spending = 70% GDP,Wealth Distribution,Very unequal Richest 1% = 24% of income, 35% of wealth Riches
2、t 20% = 85% of wealth -Yet- Most think the top 20% = 60% Everyone thinks they are middle class Tax cuts + people earning $250,000+ / year,Wealth Distribution 2,1930-1970: America = Mirrored politically + socially. 1980-present: has exploded. 80% income gains to top 1% 2000-2009: productivity 20%; wa
3、ge growth for middle + lower classes,Growth,Postwar period = prolonged boom 46-73 avg growth = 4% / yr Real median household income 55% 74-present Growth slows: 3% / yr Household income + wages flat Household income only 10% over 35 years Series of recessions 1973, 1975, 1981-2, 1990-91, 2001, 2008,
4、2000s,# of jobs Sep 2009 = # in June 1999 Population 9% Since 2000, 1 in 6 manufacturing jobs gone stock market growth 1998: 49% own stock; 2008: 45% Median household income Poverty 2% Uninsured population 19.5% Home ownership levels same as 2000,What happened? Why?,Shift from industrial to service
5、economy Production so efficient that the price of goods dropped compared to services. Globalization 75-80s Japan; 90s Taiwan, Singapore, S Korea; 2000-present China, India, Mexico in gov / social philosophy 33-68 Democratic, 69-09, Republican Lack of industrial policy; dismantling of New Deal,Politi
6、cal Importance,Its the economy, stupid! Every campaign office Political scientists argue election results = state of the economy 6 months prior to election.,Current Recession,Clinton Admin. focused on technology sector. Dot Com Boom 2001 recession Bush Admin. focused on construction sector. Tax cred
7、its for homebuyers Low interest rates. Houses bought on credit. Banking industry $; max profits if lending Extremely risky sells debt to Wall St.,Lehman Brothers,Lehman Brothers Bank invested heavily in the housing market. 2008: Econ begins to slow; homeowners laid-off default on loans (fail to pay
8、the bank). Lehman has to write off bad debt. Market worries Lehman able recover debt. Sep 9: “Run” on Lehman stock; company 45%. Sep 14: Bankruptcy; DOW 4.5% (1 day record). Sep 29: DOW 7%. Investors fear other banks = Lehmans,Banks fear run on stock need $ NOW,Call in loans,Stop lending,Foreclose h
9、omes Put on market, property value, $ buy or build new homes, credit, $ buy consumer goods,Construction Sector,Manufacturing Sector,Sales Sector,Financial Sector,Political Effects,September downturn Barack Obamas election $700B stimulus package TARP (a.k.a. Wall Street Bailout) Takeover of GM Health
10、 care reform political fight Jobs dont rebound quickly public backlash Impact on BP oil spill response,Special Considerations,The Upper Midwest (PA, OH, MI, IL, + WI) once renowned for industrial production (esp. steel). Now called “the rust belt” b/c of all the closed factories. Area = proud labor
11、history + high % unionized workers,Special Considerations 2,Swing states Unions = powerful supporter Unions dissatisfied difficulty wining reelection. Long term unemployment social problems, just like in China.,US, China Disputes,Both countries engage in protectionism + economic manipulation to serve political ends. United States 2009 tire spat Industrial products: steel, paper etc Agriculture: corn, soybeans, cotton etc Textiles (though more common in Europe) China Yuan Technology: Facebook, YouTube, electric cars Services: movies, banking, cell phone service etc Chicken feet,
