In his most recent column George Will tallies the economy’s performance. It goes something like this:
- In 2014 we had one quarter of 5% growth.
- Economic growth for the year was phlegmatic. Under 2%.
- At the rate at which new jobs are being produced those who lost their jobs in the late recession will never find work.
- The jobs that are being created are either a) in protected sectors or b) pay a lot less than the jobs that were lost during the recession.
- The rate of new business formation is at the lowest rate since 1980 when the Baby Boomers hit their stride.
- The rate at which households are being formed is lower, too.
- The birth rate’s down, too.
- The present expansion has continued for 73 months.
- Of the twelve post-war recessions only four have been longer. The expansion that followed the 1945 recession was 80 months long; the expansion that followed the 1970 recession was 106 months longs; the expansion that followed the 1990-1991 recession was 92 months long; the expansion that followed the 2001 recession was 120 months long.
It appears to me that we have been in a pitched battle over what constitutes a good life, what constitutes a good country. I think we’re losing.
There’s more commentary on Mr. Will’s column at memeorandum.
The jobs that are being created are either a) in protected sectors or b) pay a lot less than the jobs that were lost during the recession.
Or both! Unless cleaning bed pans if more lucrative than I’ve been led to believe….
I thought the expansion following 2001 ended in 2008. How do you get 120 months? Anyway, our expansions since 1980 have been accompanied by massive deficit spending or bubbles. While the dotcom bubble at least left us with a lot of useful infrastructure (all of that fiberoptic cable), we don’t have much to show for the real estate bubble. I still think we have been in trouble for a long time and have just been ignoring it. I suspect this is largely because the political donor class is doing well.
Steve
There’s a typo: The 120 month expansion followed the 1991 recession.
Actually, I think the typo is that “followed” should be “preceded” on all four of those expansions.
http://en.wikipedia.org/wiki/List_of_economic_expansions_in_the_United_States
Here you go, folks. This is exactly what I was talking about a few posts ago. Repeat after me – the stock market is not the economy…..
http://www.zerohedge.com/news/2015-02-05/great-pe-multiple-expansion-2011-2014-why-market-must-eventually-crater
I could be wrong, but I’ve not heard one peep from this administration about how awful Fed policy is. Not one. In fact, they crow about it. They seem to have a view on income inequality that is fed by the market and about which they do nothing sensible, though.
The folks at Zero Hedge have been calling for this since what, 2009? Meh. I think most reasonable people have accepted and understood that the slowdown going on in the rest of the world was not going to leave us unscathed.
I think that’s probably right. I use the NBER’s table and I probably misread it.
Did you even read the piece, steve? Based on your comment I suspect not.
Oh, and it was David Stockman.
Carry on.
@steve
The folks at Zero Hedge have been calling for this since what, 2009? Meh. …
I remember the naysayers back in 2006, 2007, and 2008. People like you always know everything, and when you are wrong, you will claim that nobody could have known what you claimed could never happen.
In the existing financial and monetary systems, dollars are credit instruments. They not only have no value, but they only represent future value. The dollars being created by ZIRP and QE are basically junk bonds. The danger is how much these junk bonds are being leveraged.
In the ZeroHedge link, there are all sorts of things that are really different ways of stating my usual blather, but above the last graphic, there was this:
… Stated differently, the global money printing boom of the last two decades has made US labor expensive and debt capital cheap. …
It is a different way of saying what I have been saying. US manufacturers of goods have been run off, and US manufacturers of credit have replaced them. I further state that this was intentional, but I also extend it to around 30 years.
It is out of context, but manufacturing labor did not disappear. Much of it shifted into finance and related services. Debt capital is like barrels of oil. It needs to be turned into something useful. Oil is turned into plastic credit cards, and debt capital is turned into credit card accounts. It takes workers for both.
The debt capital comes from the profits of the foreign goods these workers purchase. In essence, they are working for the company store. Your job is to tighten rope, but little do you realize, the rope you are tightening is the debt noose around your neck. It is actually kind of funny in a sick sort of way.
Drew- Of course I read it. Sheer genius predicting interest rates will rise in the future. I never can tell if he is just playing to the gold bug crowd or if he is serious.
“It is a different way of saying what I have been saying. US manufacturers of goods have been run off, and US manufacturers of credit have replaced them. I further state that this was intentional, but I also extend it to around 30 years.”
I don’t really think running off manufacturers was intentional. The expansion of the credit sector was very intentional. Please go back and reread Donald Regan. Your peg of 30 years is quite accurate. The loss of manufacturing may have been inevitable in any case.
Steve
@steve
There was no secret cabal to eliminate manufacturing, but there was groupthink among the elite that manufacturing was not desirable. Environmentalists wanted dirty industry gone. Academic snobs wanted lowbrow dirty blue collar types gone. Investors wanted higher returns. The Financial Industry wanted to expand.
When everybody is pulling in the same direction, the boat tends to go in that direction without any additional input.
Any downturn in the stock market is going to be carnage for those pension funds underwater or barely above water.