There has been a steady drumbeat of dissatisfaction about the post-credit-crisis recovery. No matter how much the economy improves, a good number of people insist it hasn’t. Now, in the midst of the political silly season, it has intensified as candidates pander to voters.
This is a subject near and dear to me (see this, this, this, this, this, and this), and it came up again recently in a FiveThirtyEight column with the headline, “The Economy Is Better — Why Don’t Voters Believe It?“
The column tells of a local business owner whose company is having a “record year.” Despite this, she is the leader of a local Tea Party group, whose view of the U.S. economy is, well, at war with the facts. “The Federal Reserve is devaluing the dollar” she said, despite the U.S. currency being the strongest in almost 13 years. “Inflation is too high,” even though it is running at less than 2 percent. “Taxes are too high,” even though most people pay some of the lowest effective rates in decades. And those statistics showing improvement in the economy? They are “misleading if not outright lies . . . The unemployment rate isn’t down.” Of course, at 5 percent it’s the lowest in seven years.
Some of the discontent is understandable and three important factors are at work: The benefits of the recovery haven’t been spread evenly; there is noise in the numbers; and plain old ignorance. I place these three in order of declining legitimacy. Let’s jump right in:
An uneven recovery: For many people, the rebound from the 2008-2009 credit crisis has been mediocre or nonexistent. These folks are not delusional — their personal situations are bad. There are still too many people either unemployed or underemployed, and many workers haven’t had pay increases that keep up with even the country’s minimal inflation. Meanwhile, two of the biggest costs of living — housing and health care — have far outpaced wage gains.
When we look at how key factors affect the state of your personal recovery – three stand out: industry, education and geography. It is clear that some people have been enjoying a very robust recovery, while others have not. The major coastal cities, the industrial heartland and (up until the price of oil collapsed a year ago), the energy producing regions, have been booming.
Consider this from the latest Bureau of Labor Statistics report: People with bachelor degrees or higher have an unemployment rate of 2.5 percent; for those without a high school diploma, it’s 6.8 percent (and that’s down from much higher). If you are in what the BLS describes as professional and related occupations such as “management, business, and financial operations,” your unemployment rate is 2.2 percent. A labor market that tight usually means more competitive wages. The labor participation rate is very telling: 74.3 percent for degree holders versus 44.8 percent for high school dropouts.
I would love to find or create a chart showing how uneven this recovery is compared with earlier ones. I suspect it might yield some interesting results.