San José, CA – Last week the U.S. economy showed more signs of weakness as retail sales in November fell for the second month in a row and new claims for regular state unemployment insurance and the federal Pandemic Unemployment Assistance rose for the second week in a row. These are more signs of a weaker economy that point to a ‘double-dip’ recession.

Retail sales, including online orders, fell 1.1% in November. The October figure was revised down from a 0.3% gain to a 0.1% loss. Sales over the Thanksgiving weekend, which included Cyber Monday, were down 14% as compared to a year earlier. The slide in sales is a result of both a sagging job market as well as the fact that much of the earlier boom was in durable goods, like appliances and electronics, which are one-time purchases.

New claims for regular state unemployment insurance rose by 23,000 to 885,000 in the week ending December 12, when most mainstream economists expected a drop. This was the first back-to-back rise in unemployment insurance claims since July. The federal PUA also saw an increase in new claims, up 40,000 to 455,000. Continuing claims for both programs as well as the federal Pandemic Emergency Unemployment Compensation or PEUC, and the state Extended Benefits or EB programs jumped by 1.6 million to rise back above 20 million in the week ending November 28.

In the last few months since the end of the extra $600 in weekly unemployment benefits, the poverty rate has gone up by 24%. With almost 8 million more people below the official poverty line, the poverty rate has risen to 11.7% of the entire population. This is the biggest increase in the 60 year history of counting poverty in the United States. Hand in hand with rising poverty is more people needing food aid and millions more renters at risk of eviction next year.

A major factor in the slowing economy has been the surging pandemic in the United States, which has been hitting new record daily highs in terms of number of new infections, hospitalizations and deaths. There was a new record high of more than 3600 deaths in one day, and more than 110,000 people in the hospital just this past week – and many doctors say the worst is yet to come. This has led to more and more businesses closing as shoppers and diners cut back out of caution or because of government restrictions.

But still politicians are undermining public health efforts. In San Bernardino County in California, one local hospital is at 300% of capacity with half their lobby turned into a COVID ward, people in the hallways, a field hospital set up outside, and ambulances lined up with patients. Still the county supervisors voted to sue the governor for his stay-at-home order. The governor himself, Democrat Gavin Newsom, doesn’t help by breaking his own rules, dining with people outside his household at an elite French restaurant with a three-star Michelin rating and $1200 per person luncheons.

The pandemic is also hitting another center of world capitalism, Europe, hard this winter. Many countries there have restored stay-at-home orders as infections and deaths surpass their spring surge when Europe was the hardest-hit area in the world. Even Japan, which has had a relatively low level of COVID infections, has seen rising rates of infections and deaths. Only China, which was the first country to see a large outbreak, has an economy that has recovered after suppressing the virus early this year. China saw a daily average of only 23 new infections in the last week for a total population of 1.4 billion.

With many federal relief programs passed with the CARES act back in March about to expire at the end of the year, Congress seems close to a compromise bill with another $900 billion in aid. Still, much of this aid will be too little, too late as Republicans in the Senate dragged their feet on a new aid package since August, when the additional $600 per week in unemployment expired. While they say that they are worried about the cost, they had no problems with Trump’s tax cut almost twice as large that benefitted big corporations. Amazon, which has seen booming business during the pandemic, has paid only $162 million in taxes over the last three years, while make almost $25 billion in profits. This works out to a 0.6% tax rate. In contrast, the average U.S. household has a federal income tax rate of about 15%, 25 times higher than what Amazon pays.

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The Labor Department report released on Thursday, October 1 showed that there was no letup in the pace of layoffs. While the number of regular state unemployment insurance claims for the week ending September 26 fell by 36,000 from a week earlier, the number of new applications for the federal Pandemic Unemployment Assistance or PUA program for the self-employed and gig workers rose by almost 35,000, leaving the total virtually unchanged.

Even worse, the broadest measure of unemployment insurance, which includes the number of people collecting benefits from the regular state unemployment insurance program, the federal PUA, as well as the Pandemic Emergency Unemployment Compensation or PEUC and the Extended Benefits program, rose by almost half a million in the week ending September 12. The PEUC and EB programs are for the long-term unemployed who have exhausted their regular UI claims. Their combined numbers rose by 180,000, showing the continued growth of the long-term unemployed.

Earlier this week, and after the reporting period in the Department of Labor report, big businesses announced tens of thousands of layoffs were coming this month. The single largest on was by the Disney corporation, which will cut 28,000 workers as their theme park and movie businesses continue to be crippled by the pandemic. Airlines announced a total of more than 30,000 more layoffs as government aid runs out at the end of September and passengers are down by more than two-thirds since before the pandemic hit. Insurance companies will cut thousands, while businesses ranging from banks to high-tech rolled out job cuts that had been postponed because of the pandemic.

Hopes for help from the federal government continue to look dim. While the Democrats in the House of Representatives are ready to pass a slimmed down $2.2 trillion aid package, Republicans in the Senate still cannot pass a counterproposal. The reason why can be seen in the latest vote to extend current spending, where ten Republicans voting against the measure. These ten are so intent on cutting spending for domestic programs that are willing to shut down the federal government to get their way and are dead set against any more aid to people hit by the recession.

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Republican presidential candidates have taken the free market view that the government is to blame for economic instability and have called for, for example, dismantling the Environmental Protection Agency (EPA) as a ‘job-killer.’ Unfortunately Democratic politicians from President Obama to California Governor Brown have also adopted this view of sacrificing the health and welfare of people in the interests of corporate profits.

These right-wing, free market views even go as far as trying to blame the boom and bust in housing prices on government-backed mortgage giants Fannie Mae and Freddie. In fact, the big boom in housing was driven by Wall Street and big banks that pushed risky and exotic mortgages from 2003 to 2007 while pushing Fannie and Freddie to the sidelines. The right wing also tries to put blame for the housing crisis on federal government efforts to increase homeownership among African Americans and other oppressed nationalities under the Democratic Clinton administration, when the big boom and bust came under Republican George Bush.

Backers of the free market view are calling for more austerity. Republican presidential candidates complain that the poor, working parents and seniors on Social Security often pay no income tax, while ignoring the payroll and sales taxes that lower income folks pay. Free marketers claim that extending unemployment insurance benefits causes unemployment by reducing people’s interest in finding a job, ignoring the fact that there are almost four people looking for a job for every job opening. They have also proposed at different times to do away with Social Security and Medicare and turning people’s retirement funds over to Wall Street and health care to private insurance companies.

Keynesian economists such as Nobel-prize winner Paul Krugman have argued that these policies of austerity are cruel and that the federal government should have spent even more, as the $800 billion economic stimulus under Obama barely offset the spending cuts and tax increases by state and local government, adding little stimulus to the economy. They correctly point out that the large U.S. government budget deficits have not increased interest rates, as the interest rate on long-term government bonds have dropped to the lowest levels in 70 years.

But the example of Japan shows that even massive government spending can fail to revive an economy. In the early 1990s the Japanese economy suffered a triple whammy of recession, a stock market crash and a bursting real estate bubble. The Japanese government borrowed and spent huge amounts, driving Japanese government debt from the lowest among the wealthier nations to the highest – it is now more than twice the size of the Japanese economy (in contrast, the U.S. government’s debt is still smaller than our economic production as measured by GDP). Nevertheless, the Japanese economy has remained in the doldrums, with only a strong export sector boosting the economy.

Marxist economics sees recession as neither caused by the government nor as curable by government spending. Rather, recessions are part and parcel of a capitalist economy where profit is the motive force. Businesses cut workers’ pay and benefits to increase their profits. But this limits their workers’ ability to buy back what they create. At the same time, these profits are reinvested in developing new technologies and expanding production. This clash – between limited ability to buy and growing ability to produce – leads to periodic crisis of overproduction, or what are called recessions.

Over the last 30 years a vast expansion of debt, especially credit cards and mortgages, has allowed workers to buy more and more despite having stagnant wages. At the same time it has been a profitable investment for capital that has had a hard time finding enough productive investments to turn a profit. But this pile of debt began to collapse with the financial crisis triggered by the collapse of the Wall Street investment bank three years ago.

Without more and more debt to stimulate the economy, it should be no surprise that the recovery from the last recession has been so weak. More than two years after the official end of the last recession, there are almost 7 million fewer jobs than before the recession started and many parts of the country are still mired in depression. More frequent recessions and quite likely worse ones are in the near future, as governments lose their will to bail out the economy and austerity measures cut spending.

The ultimate solution is that we need socialism, which includes an economy based on people’s needs, not profit. But in the meantime we also need to build a mass movement to defend the unions and social programs that have helped people raise their standard of living. Instead of cutting Medicare, we need a national health insurance program for all. Instead of cutting Social Security, we need to restore Social Security taxes on higher income individuals. Instead of closing schools and raising tuition at public colleges, the U.S. must get out of Iraq and Afghanistan.

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