Rooney 7/19 (Ben Rooney, staff reporter for CNN Money, 7/19/10, “Economists see a modest pickup in hiring”, http://money.cnn.com/2010/07/19/news/economy/NABE/, LS)
NEW YORK (CNNMoney.com) -- The outlook for the job market has improved, according to a survey of leading economists released Monday, even as the economic recovery hit a speed bump in the second quarter. In its second-quarter industry survey, the National Association for Business Economics said employers grew payrolls for a second consecutive quarter this year.The percentage of firms increasing staff levels grew to 31% in the quarter, versus only 6% in the same period a year ago. At the same time, the percentage of employers cutting jobs continued to move lower. Looking ahead, the survey showed that 39% of companies expect to add employees over the next six months, the highest level of planned hiring since January 2008. "The labor market continued to improve, with increases in current hiring and a rise in the percentage of firms planning to add workers over the next six months," William Strauss, an economist at the Federal Reserve Bank of Chicago, said in a statement. The jobs outlook is encouraging news for American workers. The U.S. unemployment rate stands at 9.5% as of June. The jobless rate has averaged 9.7% over the first half of the year, and many economists expect it to remain elevated into 2011.
Low – 1NC
Risk of prolonged recession is growing. All fundamentals are weak and similarities to the lost decade are strong.
Isidore 7/15 (Chris Isidore, senior writer for CNN Money, July 15, 2010, “Lost decade: The new threat to the U.S. economy”, http://money.cnn.com/2010/07/15/news/economy/lost_decade/, LS)
NEW YORK (CNNMoney.com) -- The risk of a double-dip recession is getting a lot of attention, but even that grim prediction could prove a little too optimistic. Disappointing job reports, weakness in housing and consumer spending and problems in world financial markets have raised concerns about the U.S. economy stalling out later this year. Now some economistsare starting totalk about an even worse fate: a prolonged period of very weak growth, a so-called "lost decade." "The probability of a lost decade is significantly greater than a double dip," said Sung Won Sohn, economics professor at Cal State University Channel Islands. "We don't have too many engines of growth functioning right now -- housing, consumer spending, exports are all sputtering. I have a hard time seeing where we can get 3% economic growth back." A lost decade, or something like it, could feel like a never-ending recession to many Americans, as the economy does not grow fast enough to recoup lost jobs, and investments like homes and stocks continue to lose value. The most famous lost decade occurred in Japan in the 1990s. From 1992 through 1999, the Japanese economy grew by less than 1% a year. It has yet to fully recover from the economic weakness and falling prices it suffered during that period. There are a number of similarities between conditions in Japan in the 1990's and the United States today. Japan had a real estate bubble inflate and then burst, resulting in banks choked with bad loans on their balance sheets and a cutback in lending. The Bank of Japan did what it could to spur the economy, including cutting its key interest rate to near 0% and pumping money into the economy through asset purchases, just as the Federal Reserve has done over the last two years. But those steps had limited effectiveness. And Japan suffered through bouts of deflation, in which falling prices caused businesses to cut production and employment, a scenario all too familiar to U.S. workers. Deflation has been relatively rare in U.S. history, with no significant examples since the Great Depression. But with inflation nearly non-existent, some Federal Reserve policymakers said at their June meeting that they were worried about the threat of deflation. Sohn puts the chance of a prolonged period of weak growth as high as 40%, with the chance of a double dip only 20%-25%. "If I had a choice I would much rather have a double dip and be done with it. A lost decade is much more dangerous, economically, socially and politically," said Sohn. The growth produced during U.S. recoveries has been trending lower over the last 40 years or more, according to Lakshman Achuthan, managing director of Economic Cycle Research Institute. He believes underlying changes in the economy will cause that trend to continue. Achuthan said he's worried that with increased volatility, recessions are likely to become more frequent, causing the economy to lose more ground in upcoming recessions than it is able to recover from during growth periods.
Econ Low Extensions
State budget crises are destroying the national economy.
Miller 7/15 (Don Miller, Associate Editor, Money Morning, July 15, 2010, “State Budget Crises Threaten U.S. Economic Recovery”, http://moneymorning.com/2010/07/16/state-budget-crises/, LS)
Across the country state budget crises are threatening to undermine the U.S. economic recovery. Some 48 states are emerging from a round of painful budget cuts for their 2010 fiscal budgets, and at least 46 states face shortfalls for the upcoming 2011 fiscal year, which in most states began July 1. The recession has caused the steepest decline in state tax receipts on record - and states will continue to struggle to find the revenue needed to support critical public services for a number of years as a result. Since virtually all states are required to balance their operating budgets each year they cannot maintain services during an economic downturn by running a deficit, as the federal government does. Heading into the recession, states had substantial budget surpluses, generating record reserves. But those have now been depleted. And with federal stimulus funds dwindling, states must address remaining shortfalls with a combination of spending cuts and/or tax increases. Spending Cuts & Tax Increases Not Enough States have slashed spending by $74 billion since 2008, according to the National Association of State Budget Officers. If states continue to cut spending as they have in the current fiscal year without additional federal aid, the national economy stands to lose up to 900,000 public- and private-sector jobs according to the Center on Budget and Policy Priorities (CBPP). In response, states are taking actions to mitigate the extent of the cuts by raising taxes. Since the recession began, more than 30 states have attempted to address budget shortfalls by increasing taxes. But like budget cuts, tax increases remove demand from the economy by reducing the amount of money consumers have to spend. As a result, falling revenues fail to adequately fund spending, leading to massive deficits. States have projected total budget deficits of $127 billion through 2012, according to a report last month by the governors association and the National Association of State Budget Officers. But the CBPP says the numbers could actually be much worse. Counting year-to-date deficits, 48 states still face such shortfalls in their budgets for fiscal year 2010, totaling $200 billion or 30% of state budgets - the largest gaps on record. And states' fiscal problems will continue into the next fiscal year and likely beyond. The numbers suggest that when all is said and done, states will have to deal with total budget shortfalls of some $260 billion for 2011 and 2012. Shortfalls Hit Home The budget shortfalls have led to draconian cuts in expenditures. Cuts enacted in at least 45 states plus the District of Columbia since 2008 have occurred in all major areas of state services, including health care, services to the elderly and disabled, K-12 education, higher education, road and bridge maintenance and other areas. Illinois let $5 billion of bills go unpaid. Washington closed state offices. Minnesota is delaying tax refunds for a second year. All those budget cuts eventually are felt at the local level, where counties and municipalities provide services to local citizens. Local government activities, such as funding police, school buildings, fire departments, parks and social programs, are in the line of fire. Los Angeles furloughed workers with unpaid days off to help close its budget gap, and Detroit has shut schools. A survey by the National League of Cities released in May, showed 70% of cities are cutting payrolls, with some 68% reducing capital projects. "We are where the rubber meets the road," Sam Olivito of the California Contract Cities Association, which represents cities that outsource public services, told the Financial Times. "Local government is the fabric of our nation - it's what keeps everything working properly." The cuts in state-funded services would have been much greater had President Barack Obama's $787 billion stimulus program not provided roughly $140 billion over two and a half years to help states pay for education, health care, public safety, and other key services. Many states including New York and California have urged Congress to extend stimulus spending authorized to combat the recession, including extra Medicaid funding and money to pay public school teachers. But the stimulus program is winding down and states can no longer count on the federal government for more budget bailouts. States expecting Congress to authorize more assistance are "going to be left with a very large hole to fill," Erskine Bowles, co-chairman of the National Commission on Fiscal Responsibility and Reform told Bloomberg.Former Republican Senator Alan Simpson of Wyoming, the panel's other co-chairman, told governors on Tuesday that the depth of the federal government's spending imbalance is "shocking," leaving no funding available for state fixes.