Recession, tech cost middle class Americans their jobs

Job seekers wait in a line at a job fair in Southfield, Mich. In the United States, half of the 7.5 million jobs lost during the Great Recession were paid middle-class wages, ranging from $37,000 to $68,000. But only 2 percent of the 3.4 million jobs gained since the recession are mid-pay. (AP Photo/Paul Sancya, File)
Job seekers wait in a line at a job fair in Southfield, Mich. In the United States, half of the 7.5 million jobs lost during the Great Recession were paid middle-class wages, ranging from $37,000 to $68,000. But only 2 percent of the 3.4 million jobs gained since the recession are mid-pay.
(AP Photo/Paul Sancya, File)

Five years after the start of the Great Recession, the toll is terrifyingly clear: Millions of middle-class jobs have been lost in developed countries the world over.

And the situation is even worse than it appears.

Most of the jobs will never return, and millions more are likely to vanish as well, say experts who study the labor market. What’s more, these jobs aren’t just being lost to China and other developing countries, and they aren’t just factory work. Increasingly, jobs are disappearing in the service sector, home to two-thirds of all workers.

They’re being obliterated by technology.

Year after year, the software that runs computers and an array of other machines and devices becomes more sophisticated and powerful and capable of doing more efficiently tasks that humans have always done. For decades, science fiction warned of a future when we would be architects of our own obsolescence, replaced by our machines; an Associated Press analysis finds that the future has arrived.

“The jobs that are going away aren’t coming back,” says Andrew McAfee, principal research scientist at the Center for Digital Business at the Massachusetts Institute of Technology and co-author of “Race Against the Machine.” ”I have never seen a period where computers demonstrated as many skills and abilities as they have over the past seven years.”

The global economy is being reshaped by machines that generate and analyze vast amounts of data; by devices such as smartphones and tablet computers that let people work just about anywhere, even when they’re on the move; by smarter, nimbler robots; and by services that let businesses rent computing power when they need it, instead of installing expensive equipment and hiring IT staffs to run it. Whole employment categories, from secretaries to travel agents, are starting to disappear.

“There’s no sector of the economy that’s going to get a pass,” says Martin Ford, who runs a software company and wrote “The Lights in the Tunnel,” a book predicting widespread job losses. “It’s everywhere.”

The numbers startle even labor economists. In the United States, half the 7.5 million jobs lost during the Great Recession were in industries that pay middle-class wages, ranging from $38,000 to $68,000. But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are in midpay industries. Nearly 70 percent are in low-pay industries, 29 percent in industries that pay well.

In the 17 European countries that use the euro as their currency, the numbers are even worse. Almost 4.3 million low-pay jobs have been gained since mid-2009, but the loss of midpay jobs has never stopped. A total of 7.6 million disappeared from January 2008 through last June.

Experts warn that this “hollowing out” of the middle-class workforce is far from over. They predict the loss of millions more jobs as technology becomes even more sophisticated and reaches deeper into our lives. Maarten Goos, an economist at the University of Leuven in Belgium, says Europe could double its middle-class job losses.

Some occupations are beneficiaries of the march of technology, such as software engineers and app designers for smartphones and tablet computers. Overall, though, technology is eliminating far more jobs than it is creating.

To understand the impact technology is having on middle-class jobs in developed countries, the AP analyzed employment data from 20 countries; tracked changes in hiring by industry, pay and task; compared job losses and gains during recessions and expansions over the past four decades; and interviewed economists, technology experts, robot manufacturers, software developers, entrepreneurs and people in the labor force who ranged from CEOs to the unemployed.

The AP’s key findings:

—For more than three decades, technology has reduced the number of jobs in manufacturing. Robots and other machines controlled by computer programs work faster and make fewer mistakes than humans. Now, that same efficiency is being unleashed in the service economy, which employs more than two-thirds of the workforce in developed countries. Technology is eliminating jobs in office buildings, retail establishments and other businesses consumers deal with every day.

—Technology is being adopted by every kind of organization that employs people. It’s replacing workers in large corporations and small businesses, established companies and start-ups. It’s being used by schools, colleges and universities; hospitals and other medical facilities; nonprofit organizations and the military.

—The most vulnerable workers are doing repetitive tasks that programmers can write software for — an accountant checking a list of numbers, an office manager filing forms, a paralegal reviewing documents for key words to help in a case. As software becomes even more sophisticated, victims are expected to include those who juggle tasks, such as supervisors and managers — workers who thought they were protected by a college degree.

—Thanks to technology, companies in the Standard & Poor’s 500 stock index reported one-third more profit the past year than they earned the year before the Great Recession. They’ve also expanded their businesses, but total employment, at 21.1 million, has declined by a half-million.

—Start-ups account for much of the job growth in developed economies, but software is allowing entrepreneurs to launch businesses with a third fewer employees than in the 1990s. There is less need for administrative support and back-office jobs that handle accounting, payroll and benefits.

—It’s becoming a self-serve world. Instead of relying on someone else in the workplace or our personal lives, we use technology to do tasks ourselves. Some find this frustrating; others like the feeling of control. Either way, this trend will only grow as software permeates our lives.

—Technology is replacing workers in developed countries regardless of their politics, policies and laws. Union rules and labor laws may slow the dismissal of employees, but no country is attempting to prohibit organizations from using technology that allows them to operate more efficiently — and with fewer employees.

Some analysts reject the idea that technology has been a big job killer. They note that the collapse of the housing market in the U.S., Ireland, Spain and other countries and the ensuing global recession wiped out millions of middle-class construction and factory jobs. In their view, governments could bring many of the jobs back if they would put aside worries about their heavy debts and spend more. Others note that jobs continue to be lost to China, India and other countries in the developing world.

But to the extent technology has played a role, it raises the specter of high unemployment even after economic growth accelerates. Some economists say millions of middle-class workers must be retrained to do other jobs if they hope to get work again. Others are more hopeful. They note that technological change over the centuries eventually has created more jobs than it destroyed, though the wait can be long and painful.

A common refrain: The developed world may face years of high middle-class unemployment, social discord, divisive politics, falling living standards and dashed hopes.

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In the U.S., the economic recovery that started in June 2009 has been called the third straight “jobless recovery.”

But that’s a misnomer. The jobs came back after the first two.

Most recessions since World War II were followed by a surge in new jobs as consumers started spending again and companies hired to meet the new demand. In the months after recessions ended in 1991 and 2001, there was no familiar snap-back, but all the jobs had returned in less than three years.

But 42 months after the Great Recession ended, the U.S. has gained only 3.5 million, or 47 percent, of the 7.5 million jobs that were lost. The 17 countries that use the euro had 3.5 million fewer jobs last June than in December 2007.

This has truly been a jobless recovery, and the lack of midpay jobs is almost entirely to blame.

Fifty percent of the U.S. jobs lost were in midpay industries, but Moody’s Analytics, a research firm, says just 2 percent of the 3.5 million jobs gained are in that category. After the four previous recessions, at least 30 percent of jobs created — and as many as 46 percent — were in midpay industries.

Other studies that group jobs differently show a similar drop in middle-class work.

Some of the most startling studies have focused on midskill, midpay jobs that require tasks that follow well-defined procedures and are repeated throughout the day. Think travel agents, salespeople in stores, office assistants and back-office workers like benefits managers and payroll clerks, as well as machine operators and other factory jobs. An August 2012 paper by economists Henry Siu of the University of British Columbia and Nir Jaimovich of Duke University found these kinds of jobs comprise fewer than half of all jobs, yet accounted for nine of 10 of all losses in the Great Recession. And they have kept disappearing in the economic recovery.

Webb Wheel Products makes parts for truck brakes, which involves plenty of repetitive work. Its newest employee is the Doosan V550M, and it’s a marvel. It can spin a 130-pound brake drum like a child’s top, smooth its metal surface, then drill holes — all without missing a beat. And it doesn’t take vacations or “complain about anything,” says Dwayne Ricketts, president of the Cullman, Ala., company.

Thanks to computerized machines, Webb Wheel hasn’t added a factory worker in three years, though it’s making 300,000 more drums annually, a 25 percent increase.

“Everyone is waiting for the unemployment rate to drop, but I don’t know if it will much,” Ricketts says. “Companies in the recession learned to be more efficient, and they’re not going to go back.”

In Europe, companies couldn’t go back even if they wanted to. The 17 countries that use the euro slipped into another recession 14 months ago, in November 2011. The current unemployment rate is a record 11.8 percent.

European companies had been using technology to replace midpay workers for years, and now that has accelerated.

“The recessions have amplified the trend,” says Goos, the Belgian economist. “New jobs are being created, but not the middle-pay ones.”

In Canada, a 2011 study by economists at the University of British Columbia and York University in Toronto found a similar pattern of middle-class losses, though they were working with older data. In the 15 years through 2006, the share of total jobs held by many midpay, midskill occupations shrank. The share held by foremen fell 37 percent, workers in administrative and senior clerical roles fell 18 percent and those in sales and service fell 12 percent.

In Japan, a 2009 report from Hitotsubashi University in Tokyo documented a “substantial” drop in midpay, midskill jobs in the five years through 2005, and linked it to technology.

Developing economies have been spared the technological onslaught — for now. Countries like Brazil and China are still growing middle-class jobs because they’re shifting from export-driven to consumer-based economies. But even they are beginning to use more machines in manufacturing. The cheap labor they relied on to make goods from apparel to electronics is no longer so cheap as their living standards rise.

One example is Sunbird Engineering, a Hong Kong firm that makes mirror frames for heavy trucks at a factory in southern China. Salaries at its plant in Dongguan have nearly tripled from $80 a month in 2005 to $225 today. “Automation is the obvious next step,” CEO Bill Pike says.

Sunbird is installing robotic arms that drill screws into a mirror assembly, work now done by hand. The machinery will allow the company to eliminate two positions on a 13-person assembly line. Pike hopes that additional automation will allow the company to reduce another five or six jobs from the line.

“By automating, we can outlive the labor cost increases inevitable in China,” Pike says. “Those who automate in China will win the battle of increased costs.”

Foxconn Technology Group, which assembles iPhones at factories in China, unveiled plans in 2011 to install one million robots over three years.

A recent headline in the China Daily newspaper: “Chinese robot wars set to erupt.”

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Candidates for U.S. president last year never tired of telling Americans how jobs were being shipped overseas. China, with its vast army of cheaper labor and low-value currency, was easy to blame.

But most jobs cut in the U.S. and Europe weren’t moved. No one got them. They vanished. And the villain in this story — a clever software engineer working in Silicon Valley or the high-tech hub around Heidelberg, Germany — isn’t so easy to hate.

“It doesn’t have political appeal to say the reason we have a problem is we’re so successful in technology,” says Joseph Stiglitz, a Nobel Prize-winning economist at Columbia University. “There’s no enemy there.”

Unless you count family and friends and the person staring at you in the mirror. The uncomfortable truth is technology is killing jobs with the help of ordinary consumers by enabling them to quickly do tasks that workers used to do full time, for salaries.

Use a self-checkout lane at the supermarket or drugstore? A worker behind a cash register used to do that.

Buy clothes without visiting a store? You’ve taken work from a salesman.

Click “accept” in an email invitation to attend a meeting? You’ve pushed an office assistant closer to unemployment.

Book your vacation using an online program? You’ve helped lay off a travel agent. Perhaps at American Express Co., which announced this month that it plans to cut 5,400 jobs, mainly in its travel business, as more of its customers shift to online portals to plan trips.

Software is picking out worrisome blots in medical scans, running trains without conductors, driving cars without drivers, spotting profits in stocks trades in milliseconds, analyzing Twitter traffic to tell where to sell certain snacks, sifting through documents for evidence in court cases, recording power usage beamed from digital utility meters at millions of homes, and sorting returned library books.

Technology gives rise to “cheaper products and cool services,” says David Autor, an economist at MIT, one of the first to document tech’s role in cutting jobs. “But if you lose your job, that is slim compensation.”

Even the most commonplace technologies — take, say, email — are making it tough for workers to get jobs, including ones with MBAs, like Roshanne Redmond, a former project manager at a commercial real estate developer.

“I used to get on the phone, talk to a secretary and coordinate calendars,” Redmond says. “Now, things are done by computer.”

Technology is used by companies to run leaner and smarter in good times and bad, but never more than in bad. In a recession, sales fall and companies cut jobs to save money. Then they turn to technology to do tasks people used to do. And that’s when it hits them: They realize they don’t have to re-hire the humans when business improves, or at least not as many.

The Hackett Group, a consultant on back-office jobs, estimates 2 million of them in finance, human resources, information technology and procurement have disappeared in the U.S. and Europe since the Great Recession. It pins the blame for more than half of the losses on technology. These are jobs that used to fill cubicles at almost every company — clerks paying bills and ordering supplies, benefits managers filing health-care forms and IT experts helping with computer crashes.

“The effect of (technology) on white-collar jobs is huge, but it’s not obvious,” says MIT’s McAfee. Companies “don’t put out a press release saying we’re not hiring again because of machines.”

___

What hope is there for the future?

Historically, new companies and new industries have been the incubator of new jobs. Start-up companies no more than five years old are big sources of new jobs in developed economies. In the U.S., they accounted for 99 percent of new private sector jobs in 2005, according to a study by the University of Maryland’s John Haltiwanger and two other economists.

But even these companies are hiring fewer people. The average new business employed 4.7 workers when it opened its doors in 2011, down from 7.6 in the 1990s, according to a Labor Department study released last March.

Technology is probably to blame, wrote the report’s authors, Eleanor Choi and James Spletzer. Entrepreneurs no longer need people to do clerical and administrative tasks to help them get their businesses off the ground.

In the old days — say, 10 years ago — “you’d need an assistant pretty early to coordinate everything — or you’d pay a huge opportunity cost for the entrepreneur or the president to set up a meeting,” says Jeff Connally, CEO of CMIT Solutions, a technology consultancy to small businesses.

Now technology means “you can look at your calendar and everybody else’s calendar and — bing! — you’ve set up a meeting.” So no assistant gets hired.

Entrepreneur Andrew Schrage started the financial advice website Money Crashers in 2009 with a partner and one freelance writer. The bare-bones start-up was only possible, Schrage says, because of technology that allowed the company to get online help with accounting and payroll and other support functions without hiring staff.

“Had I not had access to cloud computing and outsourcing, I estimate that I would have needed 5-10 employees to begin this venture,” Schrage says. “I doubt I would have been able to launch my business.”

Technological innovations have been throwing people out of jobs for centuries. But they eventually created more work, and greater wealth, than they destroyed. Ford, the author and software engineer, thinks there is reason to believe that this time will be different. He sees virtually no end to the inroads of computers into the workplace. Eventually, he says, software will threaten the livelihoods of doctors, lawyers and other highly skilled professionals.

Many economists are encouraged by history and think the gains eventually will outweigh the losses. But even they have doubts.

“What’s different this time is that digital technologies show up in every corner of the economy,” says McAfee, a self-described “digital optimist.” ”Your tablet (computer) is just two or three years old, and it’s already taken over our lives.”

Peter Lindert, an economist at the University of California, Davis, says the computer is more destructive than innovations in the Industrial Revolution because the pace at which it is upending industries makes it hard for people to adapt.

Occupations that provided middle-class lifestyles for generations can disappear in a few years. Utility meter readers are just one example. As power companies began installing so-called smart readers outside homes, the number of meter readers in the U.S. plunged from 56,000 in 2001 to 36,000 in 2010, according to the Labor Department.

In 10 years? That number is expected to be zero.

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NEXT: Practically human: Can smart machines do your job?

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AP researcher Judith Ausuebel contributed to this story from New York. Paul Wiseman reported from Washington. You can reach the writers on Twitter at www.twitter.com/BernardFCondon and www.twitter.com/PaulWisemanAP. Join in a Twitter chat about this story on Thursday, Jan. 24, at noon E.S.T. using the hashtag (hash)TheGreatReset.

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Copyright 2013 The Associated Press.  All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Copyright 2013 Capitol Hill Blue

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A sour end to 2012: Will 2013 be better?

Fireworks explode over Times Square as the crystal ball is hoisted before New Year celebrations in New York December 31, 2012. REUTERS/Joshua Lott
Fireworks explode over Times Square as the crystal ball is hoisted before New Year celebrations in New York December 31, 2012.
REUTERS/Joshua Lott

Many Americans seem to be in a sour mood as 2013 begins, after Hurricane Sandy ravaged parts of the East Coast, a gunman massacred 20 school children in Connecticut and a long, contentious election campaign was followed by failure to resolve the “fiscal cliff” issue by year-end.

Americans have not been very optimistic since the Great Recession of 2008-2009, but the gloom had begun to lift this year until the blast of bad news as 2012 ended, IPSOS pollster Cliff Young said on Monday. IPSOS polling showed that some angst set in as the year ended.

Sixty-eight percent of respondents said the economy was on the wrong track at the end of 2012, IPSOS said, and 64 percent had a negative opinion of national politics.

“I do think these events had some sort of effect on people’s short-term prospects,” Young said.

But the headlines of 2012 belie a number of positive underlying trends in America, and Young said he expects public opinion to turn more positive in the new year.

Here is a summary of some of the positive trends in health, health, security, the environment, personal finance and education:

COLLEGE EDUCATION: More than 30 percent of Americans 25 years of age or older have finished four years of college, the highest level since 1940. Another 26 percent of adults have completed one to three years of college such as a community college, according to Census Bureau data.

This is important because the lifetime earnings of a person with a college associate’s degree working from age 25 to 64 will be $442,000 more than that of a high school graduate. A bachelor’s degree could yield $1 million more in lifetime earnings, a Census Bureau study found.

http://www.census.gov/hhes/socdemo/education/index.html

CONSUMER DEBT: While Americans are known as big spenders on credit, some surveys show that since the Great Recession of 2008-09, consumers are becoming more frugal. The average consumer with an account had credit card debt of $5,371 in November, 2012, down from $6,503 the same month a year ago, according to consumer organization Credit Karma. Average mortgage and auto debt also was down and even student loan debt, which has been rising, inched lower in November.

The end of the year usually brings increases in credit card debt due to holiday shopping, but consumers seem to be spending more responsibly and paying more with cash. Spending has been more conservative in general over the last four years since the recession, and credit card companies are lowering debt limits, Credit Karma said.

CHARITABLE GIVING: Despite the uncertain economy, Americans continue to be generous to charities. Donations rose to $298.42 billion in 2011, the highest since the Great Recession, although giving has not yet reached pre-recession levels.

Giving by Americans increased 4 percent in 2011 compared with 2010, with individual donations accounting for nearly three-quarters of the total, according to the 57th annual report by the Giving USA Foundation and the Center on Philanthropy at Indiana University.

Corporate donations remained flat at $14.5 billion last year, foundations made almost $42 billion in grants – an increase of 1.8 percent – while gifts from estates jumped more than 12 percent to $24.4 billion.

The money went to around 1.1 million registered charities and some 222,000 American religious groups.

Religious groups received the most donations – about one- third of the total – but dropped 1.7 percent in 2011 to $95.8 billion. The only other sector to record a drop in donations was giving to foundations, which fell 6.1 percent to $25.8 billion.

http://www.reuters.com/article/2012/06/19/us-usa-charity-idUSBRE85I05T20120619

CANCER: Cancer claims the lives of more than half a million Americans every year and is the second leading cause of death after heart disease. But the numbers of deaths and people afflicted with the disease continue to decline, according to the Centers for Disease Control and Prevention. While the latest data is for 2008, officials said the trend continued in more recent years.

The federally funded CDC attributes the decline to identifying populations with unhealthy sedentary lifestyles and obesity, and intervening in a targeted way to improve their health and prevent cancer.

The highest rate of cancer deaths in the United States is for lung cancer, followed by prostate, breast cancer among women, colon, pancreatic, ovarian cancer and leukemia.

While lung cancer causes a greater rate of deaths, it is not the most frequent cancer. More Americans contract prostate cancer than any other type of the disease, followed by women with breast cancer. Lung cancer is third, followed by colon cancer, women with cancer of the uterus, and urinary bladder cancer.

http://www.cdc.gov/media/releases/2012/p0328_Cancer_deathrates.html

SMOKING: The number of Americans who smoke continues to gradually decline, to 19 percent of adults over 18 in 2011, the latest year for which statistics are available, from 19.3 percent in 2010. The news is even better for young adults: the rate of smoking among 18- to 24-year-olds dropped to 18.9 percent in 2011 from 24.4 percent in 2005.

The best trend of all is that four out of five teenagers do not smoke, and teen smoking has been on the decline since 2000, although the rate of decline has slowed.

Fewer people addicted to tobacco means lower health costs and fewer deaths, such as from lung cancer, down the road, according to the CDC.

http://www.cdc.gov/mmwr/preview/mmwrhtml/mm6144a2.htm?s_cid

http://www.cdc.gov/media/releases/2012/p0809_youth_tobacco.html

TEEN PREGNANCY: The number of births to girls aged 15 to 19 fell 8 percent in 20ll to a record low level. Teens seems to be less sexually active and more of those who are active seem to be using birth control, the CDC said.

http://www.cdc.gov/teenpregnancy/

CHILD OBESITY: After years of grim news about Americans getting fatter and sedentary, overweight children fixated on video games, the first signs of hope emerged this year. The CDC said new data showed a “modest” decline in child obesity in recent years. Two possible reasons – higher rates of breastfeeding and rising awareness of the importance of physical activity among young kids. A CDC study found 13 percent of preschoolers surveyed were obese in 1998, growing to 15 percent in 2003, but again falling below 15 percent by 2010, the most recent study year.

http://www.reuters.com/article/2012/12/25/us-obesity-kids-idUSBRE8BO07J20121225

DRINKING AND DRIVING: The incidence of Americans driving after drinking too much has declined by 30 percent over the past 5 years although it remains a serious problem. Four-in-five drunk drivers are men and especially men from ages 21 to 34.

The best news is that drinking and driving among teenagers has fallen 54 percent since 1991. Only about 10 percent of teens ages 16 years or older had driven after drinking in 2011 compared with more than 20 percent two decades ago.

The reasons for this success include a minimum drinking age of 21 in all states, zero tolerance laws, graduated drivers’ license systems and better parental monitoring, according to the CDC.

http://www.cdc.gov/vitalsigns/DrinkingAndDriving/

http://www.cdc.gov/media/releases/2012/p10_02_teen_drinking.html

LAW ENFORCEMENT DEATHS: Deaths of law enforcement officials in the line of duty fell by 23 percent in 2012 after two years of sharp increases. Some 127 federal, state and local officers were killed, with traffic accidents the top cause of death, followed by shootings.

The National Law Enforcement Officers Memorial Fund attributed the reduction to better safety for police such as use of bullet-proof vests.

While national headlines have regularly featured terrible shootings such as those at an elementary school in Newtown, Connecticut and a movie theater in Aurora, Colorado, the number of police officers killed in shootings fell 32 percent in 2012.

http://www.nleomf.org/facts/research-bulletins/

AIR QUALITY: In 2010, about 90 million tons of pollution were emitted into the atmosphere in the United States, according to the Environmental Protection Agency. These emissions form ozone and particles, reduce visibility and deposition of acids, and visibility impairment.

But the good news is that pollution in the air we breathe is down substantially in all categories. In the three decades since 1980, emissions of carbon monoxide from cars, ozone, lead, nitrogen, sulfur and particulate matter such as soot all have declined. Carbon monoxide is down 82 percent, lead down 90 percent, nitrogen down 52 percent and sulfur declined 76 percent.

http://www.epa.gov/airtrends/aqtrends.html

TRASH: Americans generated about 250 million tons of trash in 2010, most of which fouls the environment or goes into landfills. We may be starting to reform our wasteful ways, according to data from the EPA. The amount of waste generated per person per day had declined to 4.43 pounds by 2010 from 4.67 pounds five years earlier, according to the EPA.

Another positive trend is that recycling is increasing. Of the 250 million tons of trash produced in 2010, more than 85 million tons or 34.1 percent was recycled or composted.

http://www.epa.gov/waste/nonhaz/municipal/msw99.htm

Copyright 2012 Thomson Reuters

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Lots of doom and gloom in economic outlook

Maria Contrero, of Boston, removes an elite running shoe from a sole press during the assembly process at the New Balance Athletic Shoe, Inc. factory in Boston.
(AP Photo/Steven Senne)

A U.S. economy that plodded along in the first three months of the year likely grew even less in the April-June quarter. And most economists no longer think growth will strengthen much in the second half of 2012.

Weaker hiring, nervous consumers, sluggish manufacturing and the overhang of Europe’s debt crisis might be pointing toward everyone’s big fear: another recession.

Against that background, the government on Friday will issue its first of three estimates of how much the U.S. economy expanded last quarter. The consensus forecast is that growth slowed to an annual rate of 1.5 percent, according to a survey of economists by data firm FactSet. The Commerce Department will issue the estimate at 8:30 a.m. EDT.

A quarterly growth rate of 1.5 percent would be the weakest in a year. It would follow a meager 1.9 percent rate in the first three months of 2012.

Much more growth would be needed to fuel stronger hiring. Economists generally say even 2 percent annual growth would add only about 90,000 jobs a month. That’s too few to drive down the unemployment rate, which is stuck at 8.2 percent.

The U.S. economy has never been so sluggish this long into a recovery. The Great Recession officially ended in June 2009.

Until a few weeks ago, many economists had been predicting that growth would accelerate in the final six months of the year. They pointed to gains in manufacturing, home and auto sales and lower gas prices.

But threats to the U.S. economy have left consumers — who account for about 70 percent of the economy — too anxious to spend freely. Jobs are tight. Pay isn’t keeping up with inflation. Retail sales fell in June for a third straight month. Manufacturing has weakened in most areas of the country.

Fear is also growing that the economy will fall off a “fiscal cliff” at year’s end. That’s when tax increases and deep spending cuts will take effect unless Congress reaches a budget agreement.

All that is making companies reluctant to expand and hire much.

From April through June, U.S. job growth slowed to 75,000 a month, down from a healthy 226,000 average in the first three months of the year.

“The European situation has been getting worse and is dragging down the global economy,” said Sung Won Sohn, an economics professor at California State University. “And we have got the fiscal cliff to worry about in the United States.”

Six of the 17 countries that use the euro currency are in recession. Growth has also weakened in powerhouse emerging markets in China, India and Brazil. With these economies slowing, so is their demand for U.S. exports.

Sohn estimates the likelihood of a U.S. recession within the next 12 months at 30 percent to 35 percent. That’s up from his estimate of 20 percent six months ago.

Nariman Behravesh, chief economist at IHS Global Insight, puts the chance of a recession at 25 percent. He expects growth to increase slightly to an annual rate above 2 percent in the second half of this year.

Other economists are gloomier. They think growth will muddle along below 2 percent through 2012.

Many economists think consumers pulled back sharply on spending last quarter. Analysts at JPMorgan estimate that consumer spending grew at a scant 1 percent annual pace in the April-June period, down from a 2.5 percent annual increase in the first quarter.

“Businesses and consumers are quite worried, so they’re holding back,” Behravesh said. “For consumers, the worry is the jobs markets. Businesses are worried about Europe. And China is looking weaker than most of us would have thought even a few months ago.”

Behravesh said even companies that think Congress will manage to reach a budget deal by year’s end are too uncertain about possible tax changes to step up hiring.

“That is making them very cautious about investment decisions,” he said.

In delivering the Federal Reserve’s midyear economic report to Congress last week, Chairman Ben Bernanke sketched a bleak picture. And he warned that unless lawmakers strike a deal, the tax increases and deep spending cuts that will take effect Jan. 1 could trigger another U.S. recession.

Bernanke has said the Fed is prepared to take further action if unemployment stays high. He hasn’t specified what steps it might take or whether any action is imminent.

The lackluster economy is also raising pressure on President Barack Obama in his re-election fight with Mitt Romney, the presumptive Republican presidential nominee.

But few think the Fed, the White House or Congress can or will do anything soon that might rejuvenate the economy quickly. Many lawmakers, for example, refuse to increase federal spending in light of historically large budget deficits.

“There is nothing out there to light a fire under the economy,” said Joel Naroff, chief economist at Naroff Economic Advisors.

Copyright © 2012 The Associated Press

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