Is this a recovery? Not even close.
by David Atkins
Most of us have seen by now many of the graphs showing the reality of income inequality and the separation of the investment economy from the wage economy. But we haven't really seen in chart form the impact those figures have had on the recovery from the Great Recession--or lack thereof.
Fortunately, NPR's Jacob Goldstein has it covered in a story that hasn't received nearly enough attention.
Here's the chart most of us have seen before:
OK, so the recovery is slower than usual. But it's real, right? Big recession, slow recovery. Scary, but things are eventually getting better, right? Not so fast. Here's Goldstein:
The chart cuts off when employment gets back to its previous peak. But, because of population growth, getting back to where we were five years ago isn't enough. To get back to full employment, we need to have millions more jobs than we had then.
This led us to wonder: What would Scariest Jobs Chart Ever look like if you compared the past five years with comparable periods for all of the other postwar recessions. How much worse is it this time?
Here's the answer:
What is the impact of this? A 13 million job difference between this "recovery" and a normal recovery:
In other words, if this had been a typical recession and recovery, the U.S. economy would now have roughly 10 million more jobs than it did at the previous peak. In fact, there are now three million fewer jobs.Why is this happening? Well, we know it's not because the rich "job creators" don't have enough money. We know it's not because corporations don't have high enough stock valuations, or because they don't have enough profits. We know it's not because labor has too much power in the marketplace.
The answer is pretty simple: it's a matter of weak aggregate demand. Paul Krugman explained it succinctly:
I wish I could say that it’s all good news, but it isn’t. Those low interest rates are the sign of an economy that is nowhere near to a full recovery from the financial crisis of 2008, while the high level of stock prices shouldn’t be cause for celebration; it is, in large part, a reflection of the growing disconnect between productivity and wages...We have an unemployment (and underemployment) crisis. There are 13 million fewer jobs in the economy than there should be. We have an income inequality crisis. And we have a climate crisis.
Meanwhile, about the stock market: Stocks are high, in part, because bond yields are so low, and investors have to put their money somewhere. It’s also true, however, that while the economy remains deeply depressed, corporate profits have staged a strong recovery. And that’s a bad thing! Not only are workers failing to share in the fruits of their own rising productivity, hundreds of billions of dollars are piling up in the treasuries of corporations that, facing weak consumer demand, see no reason to put those dollars to work.
The solution should be obvious. It is obvious. But it's just not apparent to the the policy makers and media figures at the top of the political food chain, because it's very difficult to convince a person of the necessity of doing something that interferes with his own income. The rich and comfortable are making a whole lot of money off the status quo. Well, "making" is too kind a word for it. "Legal theft" would be more appropriate.
The rest of us, however, aren't doing so well.