[This is the addended transcript of my regular KVMR commentary broadcast on 14 September 2016.]
There was happy dancing at 1600 Pennsylvania Avenue this morning. The much publicized mirth has to do with what appears to a break in the longstanding doldrums in which our economy has been mired for the last eight years. Everyone by now has heard about the Commerce Department announcing the big jump in last year’s median income. It went up 5.2% in 2015 dollars after having declined since George W Bush left office. But before strapping on your dancing shoes, there’s more to this story than the headlines screaming ‘America gets a raise!’
But when someone starts selling recovery statistics, the buyer should be careful. Recovery has many faces and definitions ranging from nefarious through iffy to strong. For example, does recovery mean finally turning the corner on the decline? Does it mean having climbed back to pre-recession levels? Or does it mean that the pre-recession trends have been re-established? Or best of all, does recovery mean that we are now back on the pre-recession trendlines that extend over the recent economic canyon, and now yield numbers as if the recession had never occurred? (more here)
Everyone would agree that getting back to an economy that looks as if the recession never occurred would indeed be a full recovery. And most people, save the pabulum promoting politicians, would consider that turning a corner is at best problematic. Why? because a deep recession, like the one we’re attempting to climb out of, has many corners that can be turned. The current one may not be the last or even lowest one. So what kind of recovery is really being touted from Washington?
When we consider more than median income, we see an economic landscape that still looks much like an inner city street with houses needing maintenance, and some even boarded up behind weed choked yards. Even with the so-called ‘raise’, America’s median wage is still below its pre-recession level. The poverty rate has also yet to decline to its pre-recession levels. And the 4.9% unemployment rate seems low because it is computed from a population of only those working or looking for jobs. The tens of millions of Americans who have given up and left the workforce are now at historic heights. They are treated like potted plants, and not even in the equation. Think of it, if today more people become disillusioned and quit looking for work, then no additional jobs need be created for the ballyhooed unemployment rate to continue going down. That’s a recovery?
There is not enough time here for us examine the failure of the recent economic stimulus attempts that have done nothing to grow the economy, but have almost doubled our national debt to $20T over the last seven years. And our nation’s unfunded liabilities, now over $100T, are beyond reckoning. Most people, with the exception of our progressive neighbors, know that the only thing that can delay the wolf from the door is to double economic growth rates from their current below 2% to above 4%. Short of that, everything else maintains the misery and hastens the looming economic collapse whose ripples may become a tsunami that also renders our society.
In the face of this we have one candidate who proudly promises to stay the course, since she is a beholden co-architect of the status quo; and another who undoubtedly will make changes the details and effects of which cannot be known before November or even well into 2017. But we do know what doubling down taxes and regulations a la socialist Bernie will mean for the future, because we can see seven years of it in the rear view mirror.
My name is Rebane, and I also expand on this and related themes on Rebane’s Ruminations where the addended transcript of this commentary is posted with relevant links, and where such issues are debated extensively. However my views are not necessarily shared by KVMR. Thank you for listening.
[addendum] Here is a relevant graphic showing the uneven benefits of median wage increases for various racial groups in the country.
More information can be found here.
Among the many facets of Obamanomics that have inhibited our economy’s growth are the Dodd-Frank banking bill of 2010 its new Consumer Financial Protection Bureau that mangled the money markets especially as they impact lending and the availability of mortgages and operating capital for businesses. Cato’s Mark Calabria testified to Congress that “the Dodd-Frank Act represents a massive expansion of legislative delegation to administrative agencies. Its constitutional flaws do not end there. As I have focused upon, the Consumer Financial Protection Bureau is characterized by a funding mechanism designed to specifically subvert Article I Section 9 of the Constitution. Additionally its data collection activities run afoul of our Fourth Amendment protections. These extensive data collections are in no way necessary for the CFPB to achieve its statutory mission. Such could be accomplished in a manner that does not offend the Fourth Amendment. As Courts have too often been slow to protect our Fourth Amendment rights, it did take almost 30 years for Olmstead to be reversed, Congress should move quickly to protect American consumers from harm of CFPB’s data collection efforts.” (more here)
When we add to this the national travesty of Obamacare that daily unfolds to reveal yet another promised benefit that has gone by the boards, and artificially low interest rates that promise mayhem at their normalization, we have an economy whose fuse has already been lit and proceeding toward explosion. The bottom line is that EVERYTHING this administration has touched has come to cost more and become harder to make, sell, buy, and keep.