Public Perception Pessimistic on Prosperity
If you were to ask a typical American about the state of
the economy, you would get a fairly dire picture. A deep recession for the past
seven years, soaring unemployment, a GDP falling behind China. How we yearn for
the go-go 80s!
A recent poll from PRRI reports 72% of Americans believe
the US is in a recession. This is hardly new, with regular polls going
back seven years painting a similar picture. A whopping 80% believe that the
size of China’s economy is comparable or better than the US. Unfortunately, I
do not have a specific poll number regarding perception of unemployment, but it
is a common cohort in discussions and articles that I have seen. Particularly
common is the “informed” person who tells you that the ‘official’ unemployment
doesn’t include people who have given up looking for work, and the real
numbers are much, much worse.
Really??!?
These topics are not opinions, they are actually
demonstrable facts with specific definitions. I am not claiming that everything
is sunshine and rainbows in our economy, but let’s at least be correct in our
statement of the facts. A quick look at some of these numbers. First,
unemployment numbers going back to 1980:
Clearly unemployment has been on a steady road to
improvement, with a rate of recovery steeper than any since 1983. As a nod to
those who say that unemployment is a misleading number, let’s look at the
employment numbers instead, also going back to 1980 for comparison. These are
number of people who are actually employed or “seeking employment” divided by
the US population at that time. While the total percentage of the US that wants
to be employed is not as high as last decade, it is way above the 1980s and
1990s levels. What drop can be seen is immediately after the economic downturn,
and has been slowly increasing since then. There is no sign of the “hidden
unemployed” in these numbers.
The issue of China surpassing the US economy is fairly easy
to debunk. USA 2014 GDP: $17.4T ($46.4k per capita). China 2014 GDP: $10.4T ($3.9k
per capita) (source: TradingEconomics.com). Is the
US GDP on the decline? The numbers below are the annual rate of growth. This
shows numbers that are somewhat lower than average, but still represent
consistent, meaningful growth.
The
Sad Truth: It’s Not the Economy, Stupid
There is a lot of talk about “under-employment” hiding the
true employment numbers. What that term means is hard to quantify, and even
harder to get direct numbers on. However, if “under-employment” is on the rise,
we would expect to see more people earning less, and the wages of the bottom
50% to be dropping. Let’s look at the numbers.
This is where the real economic downturn can be seen. The
bottom income levels and the poverty rates have been hit, and are not improving. However, even
here, the common perception is missing the point. There is no increase in the
number of “under-employed.” What we see here is the bottom of the economic
spectrum was declining before the recession, and was further damaged by the
recession like (nearly) everyone else. However, like the other economic groups,
it has not improved. It has not participated in the recovery, but it has not
gotten worse either. While the economy as a whole improves, the bottom 20% are
stuck in place. This is not an economic issue, this is a wealth disparity
issue, and improving the economy even more is not going to help these people.
While most Americans seem to think there is something
rotten in the economy, it is highly unlikely that this issue is what they mean. There
is a very real problem affecting a large portion of our citizens, and yet the
focus is still on the perceived failings for the middle and upper
segments. To provide any meaningful solution to give relief to the people who
need it most, we need to know the facts and provide a focused plan to solve the
real problem.
