Daily Archives: 27 August 2012

Household Income

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How are we doing in the post-recession “recovery” under the Progressive policies of the Democratic Presidential Candidate Barack Obama?  One indication comes from Sentier Research and a report produced by their Gordon Green and John Coder, Changes in Household Income During the Economic Recovery: June 2009 to June 2012. (normally, I provide links to the documents from which I quote, but the folks at Sentier charge for their reports; I’ll not defeat their purpose. The report can be found at their site, here.)

The following graph from the report shows the policies’ impact on incomes of various household types in the period since 2009.  It hasn’t been good for anyone.  Green and Coder normalized household incomes, setting per cent changes to 0.0% as of January 2000 (as in the graph) and to a Household Income Index with the income levels of January 2000 being 100.0.

Moreover, they noted that household income has remained poor and relatively static after the recession “ended.”  Having fallen from a start-of-recession HII peak of a shade over 100 to 96 at the “end,” household incomes continued to fall over the following year to roughly 92 and have remained static there for the last two years.  In other words, at the official end of the recession, incomes were roughly 96% of their pre-recession levels, and since 2010 have remained static at a lower 92% of pre-recession.

The authors pointed out a number of factors related to the drop in HII, including this one:

Another important factor contributing to the steep decline of the HII is the sharp increase in the median duration of unemployment not only during the recession but also during the economic recovery, and its tendency to remain at a very high level.  During the recession, from December 2007 to June 2009, the median duration of unemployment increased from 8.4 weeks to 17.4 weeks.  During the economic recovery, the median duration of unemployment increased from 17.4 weeks in June 2009 to 25.5 weeks in June 2010, and then fell to 19.8 weeks in June 2012.

Notice that unemployment duration after the recession “ended” remains above the in-recession rate.

Meanwhile, over 20 House-passed jobs related bills have continued to languish in the Democrat-controlled Senate in the period since 2010, when unemployment remains above in-recession levels and household income remains depressed compared even to its in- and immediately post-recession levels.

A Thought on Our Economy These Last Few Years

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Both the Pew Research Center and the Congressional Budget Office have published reports in the last week that talk about the condition of our economy and the fiscal cliff that awaits us in a few short months.  Others have commented extensively on the reports themselves; I want to talk about some of the information that lies between the reports’ lines.

The Pew report focuses on the plight of the middle class, referring to “The Lost Decade of the Middle Class ” in its own headline.  The report points out, among other things, that middle class annual income has shrunk from $73k in 2001 (and 2008) to $69.5k in 2010, their most recent data.  Pew notes, also, that median middle class household net worth has fallen from $153k in 2008 to $93k in 2010.

The CBO report, on the other hand, has the following to say: if the Obama tax increases and the sequester spending cuts are allowed to go through at the start of 2013, the deficit will be cut roughly in half as a per cent of GDP, but at a cost of economic contraction of 0.5% on the year.  On the other hand, if the tax increases and spending cuts are put off for another year, the deficit will remain a damaging 6.5% of GDP, unemployment still will be at 8%, and the economy will grow an anemic 1.7%.  This is the fiscal conundrum the present administration’s Keynesian policies have created.

Plainly, the administration’s policies have been an utter failure; they have not produced economic recovery.  Indeed, the middle class, whom Progressives pretend to favor so much, have been devastated by those policies.  Still, Democratic Presidential Candidate Barack Obama wants four more years in which to do more of the same—or more so, since he’d have “more flexibility” after re-election, when he’d be beholden to no one.

After all, Obama says

The private sector is doing fine.

Hmm….