A 'Recovery' in Reverse

[Chris]

How much worse can it get?


They say the economy is moving in the right direction, that we should stay the course, be patient, that it takes time to pull out of the recession that began in late 2007.

In fact, things are getting worse.

The economy was creating 153,000 new jobs per month last year. That dropped during the first seven months of this year to an average of 139,000 per month. In August, we were down to 96,000.

...Factory payrolls were cut by 15,000 in August, the biggest decline in two years and a strong reversal of the 23,000 gain in factory payrolls in July.

The dip in the official unemployment rate from 8.3 percent in July to 8.1 percent in August was due to 368,000 people dropping out of the labor force.

The labor participation rate, the share of the working-age population in the labor force (as either employed or unemployed), dropped to 63.5 percent in August, the lowest labor participation rate in over three decades.

This decline in the labor participation rate, the increase in dropping out, is due in large part to the extended duration of unemployment in the current economy. "The average length out of the job market continues to be a stunning 39 weeks," reported the Wall Street Journal ("The Jobs Deficit," September 10, 2012), "compared to an average duration of between 15 and 20 weeks from 1984-2008."

...

A 'Recovery' in Reverse (http://spectator.org/archives/2012/09/17/a-recovery-in-reverse)

[waltky]

Seven-year malaise...
http://www.politicalforum.com/images/oldicons/icon15.gif
Is the US economic recovery stuck in a rut?
Wed, 06 Jul 2016 - The US economic recovery is now seven years old. So why don't many Americans feel like they've recovered?


On paper, all the indicators are there. The current economic expansion, which began after the global financial crisis of 2008, is among the longest in modern US history. Statistics show the jobs market is improving and the unemployment rate has fallen. Some 14 million new jobs have been created in the private sector since 2010. Manufacturing alone has added 900,000 jobs. And car sales hit a record high in 2015. Janet Yellen has said "the economy has made further progress" yet despite her reassuring words, all the supposedly encouraging data, the question vexing economists is why the country isn't in better shape.

You don't have to look far to see signs of the economy's fragility. Take the housing market. Eleven million Americans spent half their income on rent in 2014 - a record high, according to the annual State of the Nation's Housing Report from the Joint Center for Housing Studies of Harvard University. The general rule of thumb is that you shouldn't spend more than 30% of your income but with rents rising faster than wages that's impossible for many. Or what about the gross domestic product (GDP), which takes into account everything we spend our money on? The US's GDP grew just 1.1% from January to March.

Even the improving unemployment rate doesn't tell the whole picture. The country's labour participation rate - the share of the workforce in employment or looking for a job - is woefully low. Currently it stands below 63%, the lowest level since the 1970s. The bottom line is that the recovery is more fragile than anyone would like. Ms Yellen has indicated that the Fed will increase interest rates slowly. "There are structural problems in the economy and the decline in labour force participation that worries me, as well as a feeling that Washington doesn't work," said Glenn Hubbard, who was Chairman of the Council of Economic Advisers under President George W Bush and is now the dean of Columbia University business school.

Mr Hubbard isn't surprised by the malaise many are expressing but argues that the root cause extends beyond the financial crisis. "The economy as a whole is much better off from trade agreements and from immigration," he says, "but there are individuals in particular who may not be. And we as an economy haven't pursued policies particularly related to supporting work to help those individuals. "I think that's the pain we're seeing." Income inequality between countries has gone down as a result of globalisation, but it has gone up within countries. So while workers in some parts of the world now have more opportunities, Americans have lost jobs or seen their earning power decrease.

In fact, working families haven't seen a raise in decades. Many are living pay cheque to pay cheque. According to a recent survey by the Federal Reserve, nearly half of all American adults couldn't scrape together $400 to cover a financial emergency such as a health problem or a car that needed fixing. Part of the problem is the "winner takes all" economy. Those at the top are doing better. Those in the middle and bottom face stagnant wages or worse.

MORE (http://www.bbc.co.uk/news/world-us-canada-36231675)

[Chris]

Somewhere there is a recovery map of the US down at the county level. Some counties have recovered, many never will.

[Newpublius]

The malaise is twofold, government making far too many economic decisions and we have demographics and other factors leading to a low participation rate.