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US election diary: Dog days
America's traditional summer holiday is set to be its most economically troubled in years.
Last Modified: 17 Jul 2008 19:20 GMT

Patriotism runs high for Independence Day, but US economic woes continue [Reuters]

 

 

 

 

 

 

 

 

The US presidential campaign is about to go into summer slumber mode.

This week, Americans will celebrate Independence Day - July 4 - with a long weekend of picnics, parades, barbeques and, this year, with a special sense of gratitude that three Americans held prisoner by Farc rebels in Colombia for five years are back home, thanks to an amazing Colombian military and intelligence operation. 

The holiday marks the beginning of the summer vacation season, when traditionally "Mom and Dad" herd the kids into the car and take off for such all-American sites as the Grand Canyon, Disneyland, or Grandma's house.

Then, in a few weeks, those thoughtful folks at the International Olympic Committee will have arranged a little summertime diversion in Beijing, guaranteed to keep Americans glued to their television sets for most of the sticky month of August.

Only when the US political parties' almost back-to back nominating conventions begin in the last week of August will most Americans reluctantly return their attention to the clamour of the candidates.

But this summer there is a dark cloud hovering over these traditionally carefree days.

Car concerns

Previous entries


Part 1: Obama factor
Part 2: It's personal
Part 3: Overload
Part 4: A nasty week
Part 5: A week of war
Part 6: War and lies
Part 7: On the right
Part 8: Race card
Part 9: Bear baiting?
Part 10: No end in sight?
Part 11: Forced to wait
Part 12: Under par
Part 13: Tough choices
Part 14: Cashing in
Part 15: Making history

Part 16: Albatross

Americans are worried about the high price of the fuel they need to get to work or to play.

The American Automobile Association predicts that this year, the number of Americans travelling over the fourth of July holiday will decrease, for the first time in a decade. 

As high gas prices drive consumers away from the large trucks and fuel-inefficient sport utility vehicles, the American auto industry - once the country’s greatest industrial achievement - is teetering on the brink of the abyss.

June auto sales were the worst in 17 years, Ford's sales fell 28 per cent, Chrysler's dropped 36 per cent and General Motors', the largest US automaker, were down 18 per cent.

GM is in such bad shape you could buy its stock for less than $10 this week - about the same price GM shares were going for during the Eisenhower administration.

Americans are also anxious about soaring food costs cutting into family budgets.

Around 27 million Americans rely on government-issued food stamps to feed their families - a higher number than the record set in 1994. And almost half of those are from working families.

Demand at food banks is up 15 to 20 per cent over last year, while workers in charities and government assistance offices say they are now seeing people such as unemployed construction workers and real estate agents hit by the housing sector collapse.

Retirees' incomes have also been devastated by pension cutbacks and the stock market downturn. 

Job woes

But perhaps most of all, Americans are scared - about finding or keeping their jobs.

Even Starbucks is feeling the pinch
[Reuters]
The unemployment rate is at 5.5 per cent, the highest in four years. The Labour Department reported that 62,000 jobs were lost in June, the sixth month in a row that payrolls have declined.

Businesses are laying off workers and not making new hires, and even workers who are still on the payroll are seeing their hours cut and salaries trimmed.

New college graduates report it is nearly impossible to find jobs, even as pizza delivery drivers or bookstore clerks.

In another sign the economy is running out of steam, Starbucks - that ubiquitous chain that seemingly put a coffee shop on every street corner (and which introduced the American public to such annoying coffee terminology as "venti soy latte" and "caramel macchiato") is shutting down 600 unprofitable stores and laying off 12,000 employees.
 
For years, consumers shelled out three or four dollars a time for cappuccinos, but now that everyone is tightening their belts, high-end caffeination is a luxury many can no longer afford.

Feeling the pinch

The University of Michigan monthly survey of consumer perceptions and expectations shows confidence about the state of the economy is at its lowest level in 28 years.
 

In focus

In-depth coverage of
US presidential election
"Basically, people are being hit at every side in a way that's never been true before, at least not since the depression. And they're really feeling it," says Dean Baker, an economist at the Centre for Economic and Policy Research.

With the public in a troubled mood, the presidential candidates are offering sharply different prescriptions for getting the country back on track.
 
Republican John McCain's economic recovery plan focuses on expanding President George Bush's tax cuts for citizens and big corporations. 
 
"I intend to keep the current low income and investment tax rates," McCain told a small business conference last month.

"And I will pursue tax reform that supports the wage-earners and job creators who make this economy run, and help them to succeed in a global economy."
 
McCain also promises to slash wasteful government spending and would expand free-trade agreements, such as the US-Colombia free trade pact that is stalled in the Democratic controlled congress.

Democrat Barack Obama's economic plan would raise taxes on people earning more than $250,000 dollars a year and lower them for the less wealthy.

He told a rally in Flint, Michigan in June that his plan "starts with a broad-based, middle class tax cut, to help offset the rising cost of gas and food" and includes a foreclosure prevention fund "to help stabilise the housing market and keep people in their homes".
 
Obama also proposes pushing government spending on infrastructure and alternative energy, and a windfall tax on oil companies.
 
And he has put forward a plan to overhaul the health care system, which currently leaves 47 million Americans without health insurance and forces millions more to pay high prices for insurance premiums and deductibles. 

If enacted, such a plan could have a major economic effect, Baker says. 

"If you can reform the healthcare system so that people know they can get healthcare if they get sick, that would be a very big difference in their lives," he says.

A troubled summer?
 
Much of America's economic mess was years in the making, and it is impossible for any president to reverse big economic forces - such as the mortgage crisis and plummeting home prices - overnight.

But one thing a president can do is rally the people, giving them reassurance and courage.

Remember President Franklin Delano Roosevelt's declaration, in the depths of the Great Depression, that "the only thing we have to fear is fear itself"?
 
That is the kind of stoicism that may be much in demand as America endures its most economically troubled summer in a generation.

Source:
Al Jazeera
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