Measuring Economic Health (Updated)

Lately I’ve been taken to task for relying too heavily on the rate of inflation as a measure of economic health. Let’s consider some others.
Real median household income

Since 2019 real median household income in the U. S. has declined sharply.

Household net worth

When adjusted for inflation household net worth has declined.

Manufacturing activity

As a percentage of GDP manufacturing is at an historic low. When adjusted for inflation, manufacturing activity has declined.


When adjusted for inflation U. S. exports have declined.

Sales of existing homes

The sales of existing homes are down sharply.

Sales of new homes

Sales of new homes are down, too.

What about unemployment (I hear someone say)? Yes, unemployment is back down to 2019 levels but that statistic must be considered with an asterisk. Labor force participation is down since 2019:

That means that the actual number of people working has declined since 2019 and, as I have previously noted, that cannot be explained by more people pursuing higher education because college enrollments are down, too.


Youth unemployment

The youth unemployment rate is too high. That can’t be blamed on retiring Baby Boomers.

5 comments… add one
  • steve Link

    This is encouraging that you look at other factors. Now which of these is out fo trend and which of these is something over which a POTUS might have significant control/effect? For example on labor force participation Brookings (among others) says.

    “The decline in the labor force participation rate – the number of Americans either working or looking for work as a percentage of the population – is primarily due to the aging population and other structural factors, rather than cyclical weaknesses, and is expected to continue.”


  • There are lots of things the president can do. Keep fiscal policy and monetary policy aligned by not increasing spending. Propose additional cuts in spending. Take an “all of the above” energy policy. Figure out why Medicare spending has declined and keep doing it. Stop starting wars. Reduce the number of low wage workers coming into the country.

    And we have known that the Baby Boomers would get old for 80 years. It hasn’t come as a surprise.

  • steve Link

    So it’s not a surprise that the LFPR decreased yet people keep citing that as some new problem caused by Biden.

    Otherwise most fo what you suggest means working thru Congress which is dysfunctional for the most part or some other agency. I am pretty sure that you criticized the Fed for not acting sooner as an example. The Dems actually did agree to some spending cuts during the last budget crunch. Note that the GOP wont agree to tax increases. All fo the above sounds good and as noted elsewhere the Biden admin is actually pushing for expansion of small scale nuclear. If we want fewer immigrants then we need to change the asylum laws.

    I agree with figuring out what decreased Medicare spending but we should note that while you are willing to assign blame to Biden for bad things you dont give him credit for good things. Should he get credit for the manufacturing construction boom? For the boom in new business creation?


  • Like it or not presidents are held responsible for what happens on their watch whether it’s a continuation of trend or not. Furthermore, President Biden is treating the return of the unemployment rate to trend as an accomplishment. Again, like it or not you can’t have it both ways.

  • steve Link

    Hmm, looking at your new graph it looks like Youth UE is lower than it was for the entire Bush and Obama years. So it has come down from the high peak of the Trump years to by recent history a low level. This is bad?

    “Again, like it or not you can’t have it both ways.”

    Im not really interested in saying that everything that happens is or is not happening due to POTUS. I would prefer better analysis which looks at trends so that if a given metric continues to change at the same rate before and after a new POTUS takes office we dont just assume they should be blamed or get the credit. We should look at things over which they really have control. If pork prices rocket up due to some horrid swine flu it’s probably not their fault. If its because they insisted intakes or regs that caused a big jump in the cost of raising pigs then it is probably their fault. Or, as noted above, if everyone knew that demographics meant the LFPR was going to drop then at least not blame the current POTUS. Maybe this is unfair but I am not a fan of simple blame and credit.

    Of course even then context matters. If someone claims that they are the best negotiator in the world, or knows the true secret sauce to bring people together it’s certainly OK to poke fun of them. If the get elected on the basis of a bunch of claims about what they can do that should be weighted in there somewhere.


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