Why does the recovery not feel like a recovery, or at least like not much of one? I think the above chart from Wells Fargo (highlighting for emphasis) pretty much tells the story:
Real after-tax disposable income rose 0.2 percent in March, following declines of 0.1 percent in both January and February. On a per person basis, real after-tax income has shown essentially no growth for the past two years. … Given the weakness in real per capita after-tax income, the relatively healthy 2.9 percent growth in real personal consumption during the first quarter looks unsustainable. Outlays were driven by purchases of motor vehicles and other big-ticket items.
So how can consumers spend so freely with real incomes stagnant? The answer may be a combination of improving confidence about the labor market and unseasonably mild winter weather. The growth in durable goods purchases occurred at a time when weekly unemployment claims were trending down and consumer confidence was rising. With workers feeling more secure about their employment prospects, more people moved forward with big-ticket purchases that were put on hold during the recession. Since most new vehicle purchases are financed, the sluggish growth in real income growth proved to be little impediment to such spending. The solid gains in spending, however, have driven the saving rate back below 4 percent and, with jobless claims inching back up, spending will likely rise at a slower pace during the current quarter.
But none of this should be too surprising given a) the share of job creation in low-wage sectors, and b) the historically weak pace of post-recession GDP growth:
Mr. Ornstein points out in his new book, excellently covered on NPR yesterday, electing more Republicans is only going to make things worse because they’re extremists. So what’s the solution?
“…because they’re extremists.”
Not exactly a well-supported assertion let alone argument.
I would say Democrats are extremists, by policy and procedure.
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue!
Yes they are extreme capitalists it’s about time.
The problem with socialism is that eventually you run out of other people’s money.
Republicans are “extremists”? He might have as well added that “…Republicans eat their children…”. Not really an argument against Republican Economic Policy. May I add, Mr. JoeBlow that you are an excellent example of a liberal, mindless troll.
Evidently you didn’t read Ornstein’s op-ed in the Wash Post the other day. “Extremists” is his word to describe Republicans, not mine.
I’m just curious what the AEI suggests fans of the free market should do to respond to this crisis, because frankly, if you’re for economic liberty and we shouldn’t vote Republican due to their extremism, there isn’t another viable option. It’s not like we can even consider the Democrats with their “crucify them” attitude toward the companies that power the economy, the upper 50% of earners, etc.
Real disposable personal income per capita has had no net growth in over five years. The figure was $32,729 per capita in December of 2006 and currently stands at $32,685. If one wanted to be political one could argue that income has stagnated exactly coicidental with the swearing in of Democrat majorities in the House and Senate in January of 2007. But that would be crass and opportunistic. Probably it was just a coincidence.
“Bad Luck”
Coud it be that the boot Obama’s kommisars were keeping on the neck of BP slipped off and landed on the neck of the economy as a whole? Or maybe the czars nailed a few too many to their cross of kollektivism?
Had enough of the thieving Democrats, yet? It’s your money, it’s your future they are spending. And yes, you will have to pay it all back..
Well said, not to mention seems no one can understand that we really have an The Illusion of Economic Recovery
Your data suggests that the Kennedy, Nixon, and Ford recoveries were much stronger than the Clinton, George W Bush, and Obama recoveries.
This suggests that plugging the deficit hole with increased taxes on wealthier (i.e. productive) tax payers (Clinton) along with some degree of spending controls (Gramm-Rudman), blowing the deficit open with decreased taxes on the same (G W Bush), or blowing the deficit sky high with stimulus and whatnot (Obama) are all comparably ineffectiveness. It suggests that neither Obama nor Ryan have the answer.
It isn’t possible to compare recovery dynamics among the post recessions graphed here. In earlier times the regulatory constraints are not identical to present time. Many of the impediments to recovery in the 2009 forward period did not exist earlier. In addition, the elephant in the living room, the national health care legislation, creates significant uncertainty and investors react to uncertainty by being cautious and deliberate. The larger problems on the road to recovery are government created.