Pethokoukis, Economics, U.S. Economy

9 reasons why the 4-year-old US economic recovery is closer to awful than awesome

060513jobs

Washington Post columnist Dana Milbank provides Exhibit A of New Normal thinking:

Now, after a long economic winter, green shoots are everywhere: The stock market is booming, housing prices are rebounding and mortgage providers Fannie Mae and Freddie Mac, long demonized by Republicans, are returning profits to the Treasury. Job growth has accelerated and consumer confidence has reached its highest level in almost six years. Health-care cost increases are slowing, Medicare’s prospects are improving — in part because of President Obama’s health-care reforms — and gasoline prices are forecast to decline. Long-term fiscal problems remain, but the federal deficit is shrinking, putting off Washington’s debt-ceiling standoff until late fall .

And thus, Milbank concludes, 2013 Republicans are in the same pickle at those in 1999, complaining about White House scandals (Lewinsky them, IRS now) as the economy booms. Except the economy is nowhere near booming, not even at Bush levels much less Clinton levels. At National Review Online, I ticked over a slew of reasons why as we begin the fifth year of the economic recovery, things should be much better:

1. Annual US GDP growth, adjusted for inflation, has averaged an anemic 2.1% for the 15 full quarters of recovery, versus 5.1% during the same span after the severe 1981–82 recession.

2. As a result, the economy has yet to return to anywhere near its pre–Great Recession growth trend. If it had, the economy would be $1 trillion bigger today.

3. This recovery has seen the weakest increase in real disposable income of any of the seven most recent recoveries, according to ITG Market Research.

4. The average US household has recovered a mere 45% of the wealth lost during the Great Recession, according to the St. Louis Fed.

5. The economy has 2 million fewer private-sector jobs than it did at the January 2008 peak.

6. Of course, if average monthly job gains remain close to the last twelve months’ average of 180,000, then private-sector payrolls will hit an all-time high in just under one year. But even then, job levels will still be far below where they would be if the trend from 1990 through 2007 had continued, a shortfall equaling nearly 12 million missing workers.

7. If not for a collapse in the labor-force participation rate — mostly due to weak labor demand rather than demographics, according to Goldman Sachs — the unemployment rate would be at least 9%, not 7.5%.

8. The broader U-6 jobless rate, which includes some discouraged workers and part-timers who would prefer full-time gigs — is just shy of 14% vs. 8% pre-recession.

9. There are  4.4 million Americans — a whopping 37% of the total unemployed population — who’ve been unemployed for 27 weeks or longer. This group, given skill erosion and hiring bias, could become a large permanent pool of jobless Americans.

But hey, we’re better than Europe.

18 thoughts on “9 reasons why the 4-year-old US economic recovery is closer to awful than awesome

  1. Let’s look at this from an other perspective. Trump said, ” You want jobs, put a 10% tariff on all imported goods”. Could it be as simple as that? NAFTA has sent nearly 5 million jobs out of the country. What has Congress done? Could the reason be they want it this way???
    Congressmen stand at the podium and tell the corporations to repatriate the 20 – 30 billion in earnings from sending the jobs overseas. After a contribution to the campaign the problem goes away.

    • There may be some strange accents (to us Northerners) in South Carolina, Tennessee, etc., where foreign car makers are building factories, and Texas, where a full third of all new jobs in the past decade were created, but it’s still America.

      The notion of jobs being shipped from America to overseas is a red herring; they are being shipped from blue-state, bloated, unionized, high-tax, high-cost-of-living Northern states, to red, right-to-work, no-state-income-tax Southern ones.

      • Didn’t we lose 60,000 factories, first to Mexico and then to China? That’s no red herring.

        And the red-state jobs pay less than half of what the union workers got, plus fewer (if any) benefits, resulting in less discretionary spending and the disappearance of the Middle Class.

  2. Great idea, Dale. Destroy all of our export markets. That will put a damper on our high-tech sector and agriculture. Then, ensure that our imports, including oil and clothing are much more expensive.

    NAFTA has created jobs overseas and domestically. Jobs are not zero-sum as protectionists claim. If they were, our employment base would zero, since there were no jobs when the first settlers arrived.

      • http://theeconomiccollapseblog.com/archives/meet-your-new-boss-buying-large-employers-will-enable-china-to-dominate-1000s-of-u-s-communities

        During 2012, we sold about 110 billion dollars worth of stuff to the Chinese, but they sold about 425 billion dollars worth of stuff to us. That was the largest trade deficit that one nation has had with another nation in the history of the world.

        the number one U.S. export to China is “scrap and trash”.

        The Chinese have begun to buy up huge amounts of U.S. real estate. In fact, Chinese citizens purchased one out of every ten homes that were sold in the state of California in 2011.

        The Chinese are smart people, they are working on being the only gold backed currency in the world. They will one day set the standard. [gold=money - currency=paper]

        Protectionism, Putting your hands up to cover your face in an economic fight, to avoid being hospitalized.

  3. Kudlow was talking on his program a couple weeks back that we are now 12 million jobs below trend before the recession.
    In addition – Otrauma water carriers like Milbank are not called Dana Mil – Bankrupt for nothin’!!! Sorry excuse for a journalist and this even from the liberal WaPo. Just pathetic what passes for ‘news’ anymore.

  4. Tariffs are not all-or-nothing; They can be tuned
    and tailored to achieve a desired result, in this
    case making US manufacturing just slightly less
    expensive than foreign manufacturing.
    See the recent stories on Lenovo and Motorola
    starting US manufacture of computers and
    cell phones for examples.
    For another good reason, assume a world
    economic crash which stops all imports for
    a year; Wouldn’t it be nice to have some
    production capacity at home ?

  5. comedy gold?
    paul krugman wrote an article explaining why he was optimistic about the economy in 2010, because participation rate had a ‘blip’ upwards.

    how bad are things?
    when wiki stops updating its ‘debt by us presidential term’, ending economic observations in 2010, and stripping away a simple graph which provided increase of debt/gdp, things are bad.

    zfacts? chart ends in 2009.

    it is now, beyond refutation, that reagan produced one of the greatest periods of expansion, at a cost that was far less than this mediocrity.

    we just closed the books on the seventh year of sub 3% growth. the previous record was 4. 2013 and 2014 will push our record to nine years of sub 3% growth.

  6. “But hey, we’re better than Europe. ”

    No, we’re becoming Europe, Jim.

    This is what Eurosclerosis looks like – massive debt & deficits, sclerotic and inoperative labor markets, enormous bloated bureaucracy, and entitlement mentality.

    The cumulative total of this stupidity (much of it the result of idiotic Obama policy, some of it idiotic Bush government expansion) is 1.5% GDP growth. Forever. That’s all you get.

    Get used to it. You voted for this crap.

  7. One way to solve the china imports problem would be to move from the income tax to the fair tax. For people in the US it just trades one tax for another, but imports from China have to pay it too, giving US businesses and workers a significant compeditive advantage, without the problem of a protective tarriff and potential retaliation. It also makes it impossible for US corps to hide income from outsourcing, or rich US people to hide from taxes by foreign bank accounts, unless they want to live abroad as well, since they all pay the tax for any US sale. Even criminals will have to pay the tax if they use their ill gotten gains to shop. And even better, the IRS would no longer have authority to collect data on our incomes, or politically discriminate on deductins. And there is no way to hire bigtime lobbyists and avoid the tax, since it is assessed at every cash register.

  8. One way to solve the china imports problem would be to move from the income tax to the fair tax. For people in the US it just trades one tax for another, but imports from China have to pay it too, giving US businesses and workers a significant compeditive advantage, without the problem of a protective tarriff and potential retaliation. It also makes it impossible for US corps to hide income from outsourcing, or rich US people to hide from taxes by foreign bank accounts, unless they want to live abroad as well, since they all pay the tax for any US sale. Even criminals will have to pay the tax if they use their ill gotten gains to shop. And even better, the IRS would no longer have authority to collect data on our incomes, or politically discriminate on deductins. And there is no way to hire bigtime lobbyists and avoid the tax, since it is assessed at every cash register.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>