This Is Your Obama “Recovery”
By Mitch Berg
Less than half of the wealth lost in the recession has come back in the “recovery”:
From the peak of the boom to the bottom of the bust, households watched a total of $16 trillion in wealth disappear amid sinking stock prices and the rubble of the real estate market. Since then, Americans have only been able to recapture 45 percent of that amount on average, after adjusting for inflation and population growth, according to the report from the St. Louis Fed released Thursday.
In addition, the report showed most of the improvement was due to gains in the stock market, which primarily benefit wealthy families. That means the recovery for other households has been even weaker.
To the extent unemployment is down, it’s in part-time jobs. The average hours worked per week has dropped in recent months.
No. You are not better off than you were four years ago.
May 31st, 2013 at 7:53 am
“No. You are not better off than you were four years ago.”
I was thinking five years ago…gasoline, at…and we had global warming then…
“…according to the report from the St. Louis Fed released Thursday.”
Recently I’ve been having doubts about our comrade Bob Dole–yah, I get it, wounded warrior and all that…but…Washington insider, newest favorite quote for the establishment media…
…and yet…Bob was the last guy who said we should eliminate the Department of Education, a Jimmy Carter innovation.
Why do we have a “St. Louis Fed”?
Why do we have a Department of Education?
No, you are not better off than you were four years ago.
Get off your hind legs an howl.
May 31st, 2013 at 7:57 am
Correction: I meant to write:
“Get on your hind legs and howl.”
(Give me liberty or give my hind legs)
May 31st, 2013 at 8:17 am
Yes but ‘teh’ stock market!1!!eleventy!!
Yes but ‘teh’ 19 Fortune 500 HQ’s!1!!
Yes but ‘teh’ Chrysler & GM’s!1!!
Yes but……middle class!1!!
Four proofs that ‘teh’ wingnut knows nothing about economics.
May 31st, 2013 at 8:35 am
QE and stimulus makes everything worse and Obama and the Libs have their thumb on the private sector.
Watch this if you have the time. Be very nervous about stock prices http://www.youtube.com/watch_popup?v=Osq1yxSFVG0
May 31st, 2013 at 9:28 am
The actual report is available on-line and it’s interesting reading because the report measures NET worth and that’s a deceptive tool when measuring economic recovery.
If I own real estate bought with $2 million debt when prices were high, now worth only $1 million since prices have plunged, plus I have $50 in my retirement account, my net worth is -$1,999,950.
If I lose the real estate to foreclosure and file for bankruptcy, I have no asset and no debt but get to keep the retirement money, my net worth is +$50.
On paper, my finances made a tremendous swing so everything looks great. But in reality, I lost everything I invested in, worked for, saved for, planned to retire on or hoped to pass to my kids.
Net Worth numbers don’t reflect an improvement in the real world, only an improvement in financial statements. We are not – really – better off than we were.
.
May 31st, 2013 at 6:48 pm
Final May Consumer Sentiment increases to 84.5.
PMI: Increased to 58.7 from 49.0. (Above 50 is expansion).
Employment increased to 56.9, up from 48.7.
New orders increased to 58.1 from 53.2.
This was well above the consensus estimate of 50.0.
http://www.calculatedriskblog.com/2013/05/final-may-consumer-sentiment-increases.html
A Tale of Two Economies. I guess we get to choose our realities.
June 1st, 2013 at 2:18 am
Even the EU manages 1% to 2% per year GDP growth, likely due to technology and trade driven efficiency improvements.
I’d prefer 5% growth. Better for for everyone, especially working people, and well within our grasp. Economic regulation, by definition, decreases short term growth.
June 1st, 2013 at 6:35 am
Its your own fault that you stand before a Black Money Hole and not in front of a QE Quasar. ;^)
Record unemployment, low inflation underline Europe’s pain
“We do not expect a strong recovery in the euro zone,” said Nick Matthews, a senior economist at Nomura International in London. “It puts pressure on the ECB to deliver even more conventional and non conventional measures.”
http://www.reuters.com/article/2013/05/31/us-eurozone-economy-idUSBRE94U0DJ20130531
Fiscal austerity, a concept which to Germany meant nothing before the crisis, may have passed its heyday in the eurozone. This may not be the end of eurozone austerity, or even the beginning of the end, but it is the end of the beginning?
http://www.spiegel.de/international/europe/german-government-to-test-stimulus-instead-of-austerity-a-901946.html
June 1st, 2013 at 11:43 am
Where is the growth that justifies the numbers you cite, Emery? Which sector of the economy is driving it?
The GDP numbers are abysmal. 1.6% anualized growth in 4Q 2012, 2.4% annualized growth in 1Q 2013. 2.4% only looks good compared to 1.6%.
June 1st, 2013 at 7:28 pm
Yes, there is plenty of pessimism in a slow-growth but not no-growth economy.
I wonder if the Fed (QE) is enabling congress to do nothing. Congress is probably the biggest downside risk for the US economy in 2013, Fiscal policy is restraining economic growth. The FOMC is begging for help.
June 2nd, 2013 at 10:57 am
What annoys me about the so-called ‘debate’ on the economy is the ignorance, or downright misinformation, being spread by the media (NPR is the worst of the mainstream offenders, I think). Growth is the panacea that cures all economic ills, and the way to encourage growth is to reduce economic regulation.
That’s it. It is that simple.
There may be unfortunate side effects of a high growth regime (the economy is regulated for a reason), but the side effects are nothing compared to what they will be as people get hungrier and more concerned about the future and their children’s future.
Redistribution is no substitute for economic growth. It will not make the poor richer, it will not ‘provide middle class jobs’.
June 2nd, 2013 at 3:34 pm
But of course these are just ways of arguing around a middling economy that happens to be doing better than it should if you look at the world. The real story is the extent to which US domestic demand has held up and increased when it should be down.
June 2nd, 2013 at 9:22 pm
ut the US economy has led the world, not followed it, Emery. Until recently:
The Pew Research Center reported in August that 71 percent of middle-class adults say it’s harder to get ahead now than 10 years ago. That’s a jump of 9 percentage points since the Great Recession struck in 2008.
http://www.readability.com/read?url=http%3A//www.theatlantic.com/business/archive/2012/09/im-working-really-hard-but-im-not-getting-ahead-the-new-middle-class-trap/262912/
Growth would fix this. Always has. The mechanism is well understood, e.g. increase in marginal value of labor.
Gotta love the Atlantic. Doing everything they can to absolve the man elected in 2009 — the year that saw the end of the recession — of any responsibility for the current dismal state of the economy.
June 3rd, 2013 at 6:35 am
There is also the matter of weak income growth, which is holding back consumer spending.
I would like to see a policy of subsidiarity, allowing each state to create the social safety net it wants, with the federal government merely facilitating with block grants. Let Texas be Texas, and Massachusetts be Massachusetts.
The other focus should be on good government, rather than simply slashing government. Suggest ways to strip the complexity of government out while preserving its core function. Simpler tax code, simpler regulation, but still have a tax code and regulation.
June 3rd, 2013 at 10:15 am
I don’t know of anyone who is in favor of ‘simply slashing government’, Emery.
June 3rd, 2013 at 5:05 pm
I know a few anarcho-capitalists via email through LewRockwell.com, but they’re not too common. Even those would be happy to see just some of the stupidest things in government cut, like security for President Obama’s big parties and such.
I’d also like to point out that our 1% or so GDP growth is lagging population growth, so we’re still in a recession when per capita figures are used. (and, ahem, shouldn’t that be our criterion?)
June 3rd, 2013 at 8:32 pm
Manufacturing down. Not good.
Surprise Factory Downturn Holds Back U.S. Growth: Economy
. . .
The Institute for Supply Management’s factory index fell to 49, the lowest reading since June 2009, from the prior month’s 50.7, the Tempe, Arizona-based group’s report showed today. Fifty is the dividing line between growth and contraction.
http://www.bloomberg.com/news/2013-06-03/may-ism-manufacturing-index-decreased-to-49-from-50-7-in-april.html
Achieving higher growth would not be difficult. Easiest thing in the world. Reduce regulation.
The environment would suffer. Social equality would increase. Politicians would not be able to pick winners & losers. But people would have jobs and incomes would rise across the board.
The economy is not being held back by a lack of low and high skilled immigrants, so naturally that what the pol’s — of both parties — are focused on.
June 3rd, 2013 at 8:32 pm
closing emp.
June 3rd, 2013 at 10:01 pm
Manufacturing doesn’t matter because we’re in a casino nation now. Jobs are service sector. ;^)
Construction spending is up. The year over year seems more impressive.
The Census Bureau reported that overall construction spending increased in April. http://www.census.gov/construction/c30/pdf/release.pdf
June 3rd, 2013 at 10:09 pm
Let me share some reality with you. An office at the EPA once wrote to thank me for creating a spreadsheet that completed a calculation described in one of their emissions regulations. None of them could figure out how to make it work. I wanted to tell them that the calculation I had completed for them, while correct according to the regulation, didn’t actually answer the question about emissions that the regulation was supposed to cover. Our manager in charge of dealing with the EPA told me not to, as they would never understand, and might get angry. That useless calculation for the EPA took me half a day to complete. That’s what dealing with the regulators is like in practice. They scare you because of their enormous power and lack of accountability. They scare you even more because they don’t know what the hell they’re doing.
June 4th, 2013 at 11:51 am
Manufacturing is still a leading indicator, Emery.
The housing data increased mostly due to an increase in multiple-family housing. This is the opposite of good, given the glut of single-family homes. The market for them is not clearing.
The economic cheerleading for the current occupant by many news organizations is appalling. The economy is very, very sick. It is not turning around or about to turn around.
June 4th, 2013 at 11:55 am
As I mentioned earlier:
/A Tale of Two Economies. I guess we get to choose our realities./
June 4th, 2013 at 1:20 pm
You live in different nation than the US?
You do understand why GDP is the central macroeconomic measure, don’t you? All spending and investment comes from GDP. No GDP growth, not growth in investment in things like houses, cars, and consumer spending.
In other words, a construction boom caused by building more multi-unit housing is not a measure of macroeconomic success. This is because multi-unit housing is a substitute good.
Econ 101. Beans are a cheaper source of protein than beef. If people are getting poorer, they will buy less beef and more beans. because the bean producers are suddenly doing well does not mean that, gosh darn it, there are two economies and you just can’t tell what is going on, your numbers aren’t better than mine.
June 5th, 2013 at 6:39 am
I get the Fed reports for the NE and they show month to month and year by year employment by sector so it’s relatively easy to see what’s happening. So for example, at best the NE sees smallish declines in manufacturing and services growth – broadly put, because services can be broken down. Construction employment is up now but the main jobs recovery was in services. Government sector employment dropped for a while but has been fairly stable.
Is WI continuing to lose manufacturing jobs? And with this not offset by service jobs increases? That may speak to a failure to understand the drivers of modern employment; chasing manufacturing by lowering worker protections, etc. doesn’t make you competitive on cost. You need to show higher productivity. Is the real estate market there tight enough now to see employment growth?
One thing that stands out about MN is that it has long pushed toward growth in the services sectors. They’ve had some increases in manufacturing as well but my bet is you’d find those largely related to the services growth.
June 5th, 2013 at 9:48 am
Emery, I finally got around to reading back posts and lo-and-behold, I find one of yours that I agree with!
Subsidiarity. Laboratory of democracy. States’ rights. Holy cow, son, that’s federalism and yes, that’s exactly why Detroit is sucking wind while Houston is kicking a***.
You’re starting to get it. Or maybe you’ve always gotten it but now you’ve starting to express that you get it in words I can understand. Thank you!