The official unemployment rate also rose in August to 3.8%, from 3.5% in July. The August rate was the highest since February of 2022, when the jobs market was still recovering from the 2020 recession. Almost all groups saw a rise in their unemployment rate, with teenagers and Asian Americans seeing the biggest increases of almost one percent. The biggest exception was for African Americans, whose unemployment rate actually fell by one-half of one percent from July to August.

Government austerity, or cuts in spending, are showing up in the job markets, as all levels of government combined (federal, state and local) have only added 5000 job the last two months. More and more state and local governments, including school districts and state colleges and universities, are facing budget deficits, which means spending cuts and/or raising taxes or fees. Student loan interest starts to accrue this month, and payments are beginning in October. Last but not least, the federal government is facing a likely partial shutdown in October, as right-wing Republicans in the House of Representatives are refusing to pass any bill to continue funding.

Signs of distress are also growing among working-class households. Rates of late payments are rising for credit cards and car loans, even as student loans, the biggest chunk of consumer debts, are still in payment suspension. Many retailers are reporting sagging sales.

#SanJoséCA #austerity

The crisis over the debt ceiling is a result of growing polarization in the United States. Up until the 1995, Congress regularly raised the debt ceiling so that the U.S. government could carry out its spending commitments passed by Congress. But since that time, Republicans in Congress have weaponized the debt ceiling every time there was a Democratic president. By refusing to raise the debt ceiling and forcing a possible reneging of U.S. spending obligations, Republicans caused a partial government shutdown in 1995-96 under President Clinton, forced major cuts in government spending in 2011 under President Obama, and are now demanding more spending cuts under President Biden. What really concerns the Republicans is social spending that benefits the poor, not the deficit or debt. Under President Trump, Republicans raised the debt ceiling three times.

What the Republicans are demanding is the rolling back of federal Government spending. They want to spare military spending, Social Security, and Medicare (health insurance for seniors and disabled). However, they want to eliminate student loan relief, put work requirements for Medicaid (health insurance for low-income households), SNAP (Supplemental Nutrition Assistance Program, commonly known as food stamps), cutting funds to the IRS (which would make it easier to cheat on taxes and reduce tax revenues, making the deficit bigger), and cutting green energy subsidies passed under the recent Inflation Reduction Act.

Work requirements for Medicaid would cut of health insurance for an estimated 1.7 million low income individuals. Cutting off Medicaid would worsen the health care inequality in this country. The proposed Republican cuts would end food stamps for about 275,000 people. Already there is a hunger crisis in the United States, and cutting food stamps would just make it worse.

While the Biden administration had started by saying that they were not going to negotiate, they have given ground and were negotiating. Biden has said that he would accept some, but not all of the cuts. One problem with compromising is that the debt ceiling would only be raised for nine months, and then another round of Republican and right-wing demands would be put on the table. The Republicans say that their goal is to balance the budget, without touching the military, social security, or Medicare. But this would require a whopping 80% cut in all other programs, hitting programs that help working-class and poor Americans the hardest.

Unless Biden can take special measures, like invoking the 14th Amendment, or gives in to the Republicans, there is a chance that the federal government would run out of money as soon as June 1. In the last debt crisis in 2011, the Obama administration was ready to prioritize payments for U.S. government bonds to avoid a default. The Biden administration is likely to do the same, which would mean delaying other payments, especially Social Security, Medicare, and Medicaid, which are the biggest non-military spending programs. These would mean putting the needs of Wall Street over seniors and low-income families.

#SanJoséCA #DebtCeiling

San José, CA – Cracks in economy began to show up as Silicon Valley Bank, based in Santa Clara, California, just north of San José, was shut down on Friday, March 10. The bank was the 18th largest bank in the United States, and mainly served high-tech startups, venture capitalists and wealthy individuals.

The recent slowdown in Silicon Valley and interest rate hikes by the U.S. central bank, the Federal Reserve, undid the bank. A run on the bank developed, as depositors pulled their money out of the bank. The bank was forced to sell U.S. government bonds at a loss because of higher interest rates and tried to raise more money or sell itself. When this failed, the bank was shut down by California regulators and control handed over the Federal Deposit Insurance Corporation. or FDIC.

This bank failure is the largest since 2008 when Washington Mutual was taken over by J.P. Morgan Chase during the financial crisis. The failure of Silicon Valley Bank followed the announcement by Silvergate on Wednesday that it would be winding down because of losses in cryptocurrency markets. These two bank failures in one week shook Wall Street, extending the selloff in stocks and sending Bitcoin back below $20,000.

Another sign of a slowdown came on Thursday, March 9 when the Department of Labor reported that new claims unemployment insurance rose more than 20%, to 211,00 for the week ending March 4. While the total number is relatively low, this is the biggest increase in new application in eight months.

The Labor Department’s report on jobs and unemployment released the next day also showed a slower job market. 311,000 net new jobs were created in February, a good pace but far lower than the more than 500,000 new jobs in January. Industries hit hardest by the 2020 pandemic were still in recovery mode, led by gains in the leisure and hospitality. But the announced job cuts by tech firms and falling online sales caused losses in information, transportation and warehouse jobs. The slowdown broadened across industries, as the percent of industries showing job losses grew from 32% in January to 44% in February.

The unemployment rate in February ticked up by two tenths of one percent from the record low in January, coming in at 3.6%. But while the unemployment rate for white Americans only rose at 0.1%, jobless rates of oppressed nationalities all increased much more, with the highest increase among Latinos, whose unemployment rose 0.8% to a total of 5.3%.

The unemployment rate for teenagers (16-19 years old) and those who had not graduated from high school saw their unemployment rates rise by 0.8% and 1.1%, respectively. A big surge in the number of people unemployed for less than five weeks increased 17.5% to 2.3 million, showing that job loss were driving the rising unemployment rates

Average hourly wages were up 0.2%, but average hours of work per week fell by 0.3%, meaning that average weekly earnings fell in February. But these were money wages, while purchasing power fell even more because of continuing inflation.

#SanJoséCA #economy

The cuts in food stamps benefits are part of the larger package of cuts to programs that were started during the COVID pandemic in 2020. Those programs – including expanded unemployment benefits to include the self-employed and gig workers, expanding those who qualify for Medicaid (health insurance for low income individuals and households), and expanded child tax credits – have all be cut or will be in the months ahead.

Total spending on the Supplemental Nutrition Assistance Program or SNAP, the formal name for food stamps, will fall by more than $15 billion this fiscal year, which runs from October 2022 to September 2023. At the same time, military spending, including military aid to Ukraine, will rise by $120 billion, or eight times as much, this fiscal year.

Food costs are up by more than 10% as compared to a year ago, straining working people’s budgets. Most economists expect a recession this year, which would slash the incomes of working people. About 40 million people in the United States are what the federal Government calls “food insecure,” and these cuts will just make the problem worse, especially for children and seniors.

While private charities cannot make up for cuts in SNAP food stamp benefits, this cut comes at a time where private charities are also under stress. The Second Harvest Food Bank that serves San José and distributes free food in Santa Clara and San Mateo counties saw the number of people it served double in 2020 with the pandemic. But even though the pandemic illnesses and unemployment have both come down, the rising cost of rent, gasoline, food, and well, just about everything, has made it harder to keep food on the table. The local food bank is still serving 80% more than in 2019 before the pandemic and will be challenged to help the growing number of people in need.

The United States is the world’s largest exporter of food. The U.S. exports more than twice as much food as the next two largest food exporting countries combined. Yet we cannot manage to feed our own people, while spending more and more on the military and war.

#SanJoséCA #lowincomeFamilies #foodStamps

San José, CA – On Sunday, February 19, more than 350 people from the Japanese American community gathered at the San José Buddhist Church Betsuin Hall for the 43rd annual Day of Remembrance. The San José Day of Remembrance was organized the Nihonmachi Outreach Committee. The event commemorates the signing of Executive Order 9066 by President Franklin Roosevelt in 1942. Executive Order 9066 laid the basis for the incarceration of 120,000 Japanese Americans in concentration camps during World War II.

With the theme “Reparative Justice: Together We Rise”, the program stressed the unity of the Japanese American community with others who have also faced a history of national oppression in the United States. The program began with a live statement by Sumi Tanabe, and a video statement by Satomi Susie Yasui, both of them Nisei (second generation Japanese Americans) women who were sent to the camps as children.

After a candlelight procession through San José Japantown, the program restarted with a solidarity statement by Athar Sidiqee, chairman of the South Bay Islamic Association, whose original mosque is just blocks away from Japantown. The Nihonmachi Outreach Committee has had an American Muslim speaker and even a co-chair for 20 years, in solidarity with that community following the wave of attacks and government harassment following 2001.

The guest speaker was Veronica Martinez, representing the Amah Mutsun Tribal Band, whose historic lands are just south of San José. The Amah Mutsun have been fighting corporate development on these lands.

Ending the program was a performance by the San José Taiko, a Japanese drum group. In her introduction to the Taiko, Yuzo Kubota said that “I am the voice of the oppressed.” The Taiko then played DoR, written and inspired by previous Day of Remembrance programs.

#SanJoséCA #JapaneseAmericanInternment #Antiracism

San José, CA – Thousands of University of California students and workers are currently on strike across the state. In late October, the United Auto Workers union which represents 48,000 academic workers, called a strike authorization vote. In a historic vote, 98% of the 36,558 people who participated voted yes to strike. This is the largest academic workers’ strike in the history of the country.

The United Auto Workers (UAW) represents four types of academic workers at UC: postdocs, academic researchers, student employees and student researchers, each represented by their own bargaining unit. Workers are fighting for higher pay, childcare benefits, subsidies for transportation, reimbursements for international student fees, greater job security, and accommodations for students and workers with disabilities. Since bargaining began last April, the union has filed over 26 unfair labor practices against UC, which include making changes to contracts without negotiations and withholding necessary information at the bargaining table.

On Monday, November 14, the first day of the statewide strike, over 250 workers and students picketed outside UCSF Mission Bay in San Francisco. The crowd stayed strong from 9 a.m. to 5 p.m. chanting “48,000 workers strong! We can fight all day long!” and “Who’s got the power? We got the power! What kind of power? Union power!”

Anagh Sinha Ravi, a graduate student worker, linked the need for higher pay to skyrocketing rents in San Francisco. About 92% of academic workers spend over one-third of their salary on rent, with 40% of these workers spending over half of their salary on rent. “Being rent-burdened has had a big effect on my ability to perform my work because I'm constantly worrying about being able to find an apartment or being able to make ends meet when I do find an apartment,” says Ravi. He also stressed the importance of showing solidarity with international students, who have to pay an additional $15,000 in tuition on top of their visa fees. The union is demanding a $54,000 minimum salary for graduate workers. Currently the average academic worker’s salary is only $24,000.

Transportation costs also burden workers, many of whom cannot afford to rent near the UC and have to spend hundreds of dollars a month on transit passes, parking fees and gas. To address this, the union is demanding free public transit passes, subsidies for bikes and e-bikes, and cash incentives for students to commute more sustainably. Students claim this will also help mitigate the impacts of climate change.

Just a day before the strike, the union won an anti-bullying protection that would establish real recourse for workers. “The only reason the UC even took this seriously was because we called a strike authorization vote to make them take it seriously,” says Dr. Evan Holloway, a postdoctoral fellow and member of the bargaining team in UAW 5810, which represents postdocs. This victory was a direct result of mass action by UC workers.

Academic workers are rising up. They are not afraid to withhold their labor because they know that the UC cannot exist without it. They are not afraid because they know what is possible through mass action. In the words of graduate researcher Maura McDonagh, “This is what it takes. We know that together we have the power to get the UC to change.”

#SanJoséCA #UAW #UniversityOfCalifornia

Recent announcements of job cuts means that unemployment will continue to rise. Technology firms are leading the layoffs, with Twitter cutting half their workers (3700 jobs), and Snapchat 20% (1300 jobs). In the post-pandemic period, exercise equipment company Peloton cut 32% of its workforce (1250 jobs) in two rounds of layoffs, and used car retailer Carvana cut 25% (2500 jobs).

A different picture was painted by the jobs report, which said there were 261,000 net new jobs created. While this is a solid gain, it is the lowest number since December of 2020, and is another sign of a slowing economy. The slowdown in job growth was broad based, with only accommodation (hotels) and local governments hiring more than this year’s average.

Part of this divergence between the unemployment rate and new job creation is that more and more people are having to work more than one job to make ends meet. Different government agencies estimate that between 5 and 15% of workers are doing this, which would mean more jobs but not more people with jobs.

One of the reasons for this is that over the last two years price increases have outpaced wage gains. In addition, the average number of hours worked has gone down. Between the two, the purchasing power of workers’ weekly earnings was down by more than 9% since the end of the last recession.

In response to high inflation, the Federal Reserve, the U.S. central bank, has been raising the interest rate at the fastest rate in 40 years. On Wednesday, November 2, the Fed raised the interest rate for the fourth time in 2022. The Federal Funds Rate that the Fed targets has gone from around zero in March to a bit over 3.8% this week, and more increases are coming. The Fed’s goal is to slow demand for goods and services, and thus bring down inflation.

One problem that will make this task more difficult is that big corporations have been increasing their prices when demand slacks off. For example, Campbell Soup, which has a bit more than half of the canned soup market, actually raised their prices when demand for Campbell Soup dropped off as restaurants reopened and people started eating out more as the pandemic eased.

The vast majority of economists think that the fall in demand from rising interest rates will lead to the start of a recession in 2023. Total domestic demand for goods and services made in the United States has been slowing over the last nine months, with the July to September 2022 period showing only a 0.1% growth. The last two quarters, or six months, have seen a fall in spending on business investment on new plant and equipment and new residential construction. A drop in this investment sector of GDP is typical of a period leading into a recession.

While most economists think that the recession will be relatively brief and mild like 1991 and 2001, they are assuming that a financial crisis will not break out. But in fact, there are growing strains the in financial system, especially in the market for U.S. government bonds that centers the financial sector. Aside from that, the Federal Reserve is not going to slash interest rates as they did in 1991, 2001, 2008 and 2020, because of continuing high inflation. The last time a recession happened when the Fed was raising interest rates, was the brutal 1981 recession where unemployment topped 10%, the highest rate since the Great Depression of the 1930s.

More Republicans in the Congress and Senate have been threatening to hold up the budget to force cuts in Social Security and Medicare. They are trying to blame today’s inflation on the large federal government budget deficit. In fact, during the 2022 Fiscal year the federal government budget deficit fell by more than half, from almost $3 trillion in 2020 and 2021 to $1.4 trillion. But inflation continued to rise to 8% or more for the last eight months, despite the drop in the budget deficit.

Of course, Social Security and Medicare did not cause the large budget deficits; the cause was spending to fight off the effects of the pandemic. In fact, the Republicans have long wished to reward Wall Street – both the investment funds as well as private health insurance companies – by cutting Social Security and Medicare. These programs are the most help to working-class Americans, who have to depend on their benefits in old age. But this austerity will just make the recession worse, not mention the health and standard of living of our seniors.

#SanJoséCA #economy #inflation

San José, CA – Inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers or CPI-W has been rising this year at the fastest rate in 40 years. This high inflation continued in September, with prices measured by CPI-W up 8.5% over a year ago. Higher prices combined with fewer hours means that the purchasing power of average weekly earnings for workers fell 3.5% from a year earlier.

But many workers’ wages are buying even less than the 3.5% average drop in purchasing power. The difference in hourly pay gains between the highest-paid 25% of all workers, and the lowest paid 25% of workers is the widest on records going back 25 years. While the highest paid workers saw their wages rising on average 7.3% in the last year, the lowest paid workers only saw a 4.3% increase. This means that for lower-income workers, the purchasing power of their paychecks has fallen about 5% from 2021.

Inflation was led by rising energy costs, up almost 20% from a year ago, and food, up more than 11% from a year ago. More people are falling behind on their utility bills and most people are cutting back or trading down on their food purchases.

Prices not counting food and energy were up 6.6%. While this was less than the overall increase in prices, it was also the biggest increase in 40 years. Inflation fighters at the Federal Reserve, the country’s central bank, are more concerned as inflation excluding energy and food is much harder to push down. Most economists are expecting the Fed to raise interest rates by another three-quarters of a percent at both their November and December meetings. This would raise short-term interest rates from just over 3% now to more than 4.5% by next year.

Longer-term interest rates, such as on mortgages, have been increasing even faster as the standard 30-year mortgage interest rate is now 7% or more, the highest in 20 years. This makes buying a house that much more expensive. Credit card interest rates are also rising, adding the costs of household who carry credit card debt.

The only silver lining to the inflation cloud is that Social Security benefits will rise 8.7% in 2023. This is because Social Security benefits are “indexed” or automatically adjusted for inflation using the CPI-W. In addition, there will be a very small drop in the Medicare Part B monthly premium, instead of a usual increase.

But Social Security and Medicare will be under threat if the Republicans win in the November midterm elections, as many Republicans in Congress and candidates are calling for cuts or even ending these essential programs for seniors and the disabled.

#SanJoséCA #economy #inflation

The biggest drop in new jobs was in the government, which went from adding 40,000 jobs in August to a job loss of 25,000. Most of this job loss came from cuts at local schools, which had over 20,000 fewer workers than the month before. Another sign of job market weakness could be seen among retailers, which went from a gain of more than 40,000 jobs in August to a small loss in September. Last, there was a large increase in temporary jobs, often a sign that businesses are getting worried about a coming recession and don’t want to make permanent hires.

The unemployment rate for September did drop to 3.5% from 3.7% in August. But part of this drop in the number of unemployed was because more than 50,000 jobless stopped looking for work and thus were not counted. The number of jobless workers who wanted to work, but did not look for work, in September also grew. These workers do not show up in the official unemployment numbers.

Despite the relative weakness of the report, Wall Street was hoping for an even worse report with fewer jobs and a rising unemployment rate. Investors sold stocks, with the broad based S&P 500 index falling more than 100 points, or about 2.8%.

#SanJoséCA #economy

This led to an outcry among Republicans, reinforced by many articles in the corporate media, that a recession had begun. Republican leaders immediately showed their lack of basic economic sense, saying that the American people were already feeling the pain of recession. In fact, the pain that American workers and small businesspeople are feeling is inflation, which is not a sign of a recession. Just look at the last recessions in 2020 – who was complaining about inflation?

Unfortunately, the corporate media sowed confusion by spreading the common, but wrong definition that six straight months of declining GDP means that there is a recession. Among the worst was the Washington Post, which found an economist to quote (or misquote) saying that the last time that there was a recession without six months of declining GDP was in 1947. In fact the 2001 recession did not have six straight months of GDP falling. In addition the recessions in 1960 and 1970 did not have six straight months of declining GDP.

One reason that two quarters of falling GDP is not used by economists is that most recessions since World War II (when GDP figures were available), have a “double-dip” where there is a bounce in economic activity during a recession. Because of this economists also do not conclude that a recession is over as soon as the economy begins to grow again – the growth needs to be sustained.

The official definition of a recession is a lasting slowdown in the economy as shown by employment, sales, income and industrial production. The most important measure is employment, or the number of new jobs created, which showed an increase of 372,000 in June – not a sign of a recession!

The main reason for the decline in GDP was a decline in business inventories, or the unsold goods on store shelves and warehouses. The decline in inventories was 2% of GDP, more than twice the overall decline. Falling inventories were also a major cause of the decrease in GDP in the first quarter of 2022. Both were an unwinding of the huge build-up in inventories in the last three months of 2021. This build-up was so big that it drove GDP to the highest rate of growth (6.9%) since World War II, except for the post-pandemic bounce in 2020.

But even leaving aside the drop in business inventories, the GDP report showed many signs of present and future weaknesses. Housing construction fell by three-quarters of one percent, showing that the Federal Reserve’s campaign to raise interest rates is have an effect as mortgage interest rates surged and housing sales have fallen. Government spending on goods and services fell by one-third of one percent, showing the ending of the few remaining COVID-19 programs. Business investment fell by three-quarters of one percent. While all of these figures were small, they together outweighed the three-quarters of one-percent increase in household spending on goods and services.

In fact the only strong increase in the report was in U.S. exports. But this is unlikely to continue. Not only do exports go up and down a lot, but the rise in the U.S. dollar is making U.S. goods and services more expensive for other countries to buy. A number of other countries’ economies are struggling, in particular Germany.

The report on Personal Income and Outlays for June by the Bureau of Economic Analysis on July 29 showed that the Federal Reserve’s favored inflation measure, the Personal Consumption Expenditure Price Index hit a new 40-year high, rising 6.8% over the year earlier. This means that according to the Fed, there is no break in rising inflation. This means that the Fed will continue to increase interest rates in big steps. Many economists see another three-quarters of a percent increase likely in September at the next meeting of the Federal Open Market Committee, which sets short-term interest rates.

The business cycle, or the cycle of recession and economic expansion, date back to before the Civil War in the United States. Recessions began long before there even was a Federal Reserve, or a large and active federal governments. While the government and the Fed do not cause recessions, they can influence the timing and depth of a recession. The fall in government spending and continuing increase in interest rates will move up the onset of a recession. With the Fed focused on fighting inflation and the renewed effort to cut the budget deficit in Washington DC, the next recession could last longer and cause more pain to working Americans than economists expect.

#SanJoséCA #recession #economy

San José, CA – Over the last two years, hundreds of thousands of Asian Americans and their supporters have tak