Wednesday, June 10, 2009

Auto Industry Problems Prolong Nation's Misery

The NY Times has an article about our state's efforts to remake ourselves without "King Auto" that touches on things most of know - film incentives, green jobs, battery production, and worker retraining. It also touched on the fact that our problems are impacting the country as a whole.
On a broader level, the troubles of the auto industry are having a profound impact on the overall United States economy. The industry — with Michigan as its center — now accounts for only 1.5 percent of the nation’s economic output, down from 3 percent in 2007 and 5 percent at its peak in the 1950s.

The automakers have historically played a big part in ending recessions. Car companies, in the past, would increase production and add workers to satisfy pent-up consumer demand after a downturn. But now, the industry’s troubles may be prolonging the misery.

“If not for the problems in the auto industry, this recession would have been much milder,” said Ben Herzon, an economist at Macroeconomic Advisors, in St. Louis. [emphasis added]
Okay, that's something most of us know too, but I pointed it out for all the Limbaugh and Hewitt trolls that might be reading this. Hoping that GM or Chrysler fails is not in the best interest of the country. When we lose jobs, we lose money, and in turn we stop spending. When we stop spending, businesses lose money and they're forced to layoff people or cut wages. Unless you're independently wealthy, the pain will eventually trickle down to you too. Understand?


K. said...

Did you read Michael Moore on the GM bankruptcy? He says that the best thing would be to shut it down as a car manufacturer and retool for high-speed rail, with federal and state gov'ts as its customers.

abi said...

I keep reading lately how the economy is getting better. That's strange, considering the unemployment level is still rising and is now at the doorstep of 10% - and that's an unrealistically low number. But the stock market is rebounding. I guess that's what's really important to the people who matter, and those people ain't us.

Kathy said...

K, I only skimmed Moore's article, but I can tell you that our governor was in Washington last week meeting with Obama officials about high-speed rail. I posted something about it on BFM in case you're interested. Granholm basically stated that we have the know-how, capacity and workers to make trains and we're more than ready to get the work. (GM used to make rail cars but sold the business years ago. Like so many industries, our country now buys rail cars from overseas. Spain makes Amtrak's.)

Abi, you're right about that unrealistically low unemployment number, and the number of people actually working is not a good indicator of how we're doing. I recently read that employers are reducing wages and/or hours because they can't afford to cut employees, but the lost wages still affect our economy. Working or laid off, people are still struggling - the only difference is to what degree.