Tuesday, June 25, 2019

What's a "Good Economy" Mean?

Our President and the Republican pundit world are promoting the idea we have a great economy.  Oddly, although Democrats grump about specific issues related to the economy they don't directly challenge the notion we have a "great economy".  

Let's apply a little common sense to test the state of our economy.

Is it a great economy when our national debt is increasing twice as fast as our economy is growing?  

According to the Treasury Department the National debt increased by 2 Trillion dollars in the first two years of the Trump administration, as a percentage of GDP an increase of 10%.  Total GDP growth for the Trump years equals 4.5% of GDP.  So the National debt has grown more than twice as fast as GDP during the Trump years.  Looked at from another perspective the Trump administration borrowed 2 Trillion to hand out tax cuts to benefit mostly rich folks which increased GDP by a little less than 1 Trillion.

Is it a great economy when nearly fewer people, as a percentage of the population, are employed than were employed before the Great Recession?   The administration and many economists and pundits tout statistics about job growth and low unemployment as proving we have a "great economy". A closer look shows the statistics are misleading.  

If you google the wikipedia article on Job Growth by President, which compares job growth by month since 1976 job growth during the Trump administration to date has been modest when compared to job growth in other years since 1976.  

We have an unemployment rate down pretty low, around 4%.  But 4% of what?  According to the Bureau of Labor Statistics  (see the link below) in late 2006 about 63.5% of the population was working.  Today that figure is below 60%.   

The unemployment rate isn't low because we have been engaging in wise economic policies, its low because a lot of people left the job market.  Baby boomers near retirement age who got laid off when the Great Recession hit retired or became unemployable due to age and health.   Probably part of the reason the Great Recession did not turn into a Great Depression is because many of those people were old enough to turn to retirement accounts or Social Security after their unemployment insurance payments ran out, so the consumer base of the economy did not collapse.

Wages have stagnated for nearly 40 years.  Economists have hailed modest rises in wages in the last couple years as a sign the free market is working and we are on our way back.  But they ignore the fact that much of the rise in wage growth is probably related to governments in the biggest commercial States and cities nearly doubling the minimum wage in their jurisdictions.  

The low unemployment numbers are not a sign of a strong economy, it is a function of a lack of workers, further aggravated by the Trump administration immigrant policies that have chased folks out of the country.

Is it a great economy when homelessness and poverty has increased?  After the Great Recession homelessness declined each year - until President Trump took office.  Since 2016 the number of homeless people has gone up.  Beyond official statistics it appears to me that the homelessness figures are the tip of the iceberg.  Here in California I see many people living in poverty.  Living in decrepit old trailers or motorhomes parked wherever they can find a place to land.  They can't afford an apartment or a house but they aren't technically homeless.

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