“My
Life is Good”: When Will The Economy Get
Well?
Life is Still Good For Some
Randy Newman’s witty ditty - “My Life is Good” comes to mind when we learn that without working a single day in 2010 and 2011 Mitt Romney’s combined income was $45 million. And yes, there are plenty more people out there in the very midst of the Great Recession, whose life is not only good, but actually very good indeed.
Randy Newman’s witty ditty - “My Life is Good” comes to mind when we learn that without working a single day in 2010 and 2011 Mitt Romney’s combined income was $45 million. And yes, there are plenty more people out there in the very midst of the Great Recession, whose life is not only good, but actually very good indeed.
The One Per centers And The 0.08 Per
centers
Well, just how many Americans are there whose lives are in fact (economically) “Good”? In the year 2009, the IRS reported that there were 236,883 tax filers with incomes of a million dollars or more (in a population of approximately 300 million). So this is about 1 in 1271 Americans, or .08%. It is interesting to note that the .08% number has been rounded off famously to 1%, by the Occupy Wall Street (OWS) math geniuses, apparently aping the rounding methodology of cell phone companies, who charge a full minute for even for a miniscule fraction of a second cell connection (this is presently in court).
Well, just how many Americans are there whose lives are in fact (economically) “Good”? In the year 2009, the IRS reported that there were 236,883 tax filers with incomes of a million dollars or more (in a population of approximately 300 million). So this is about 1 in 1271 Americans, or .08%. It is interesting to note that the .08% number has been rounded off famously to 1%, by the Occupy Wall Street (OWS) math geniuses, apparently aping the rounding methodology of cell phone companies, who charge a full minute for even for a miniscule fraction of a second cell connection (this is presently in court).
Scapegoating For Fun And Political Gain
Certainly it is not difficult to imagine that there may be reactions of resentment, envy, anger, and even hatred against the 1 in 1271 whose “Life Is Good”, especially in circumstances where many people are themselves hurting. This appears to be exactly what the Obama campaign is counting on, as the basis of the class warfare and income inequality strategy of its re-election campaign. To harp on, to incite, to exploit such emotions in order to gain votes. Politically, a strategy to find support in the 1271 “have-nots” rather than the 1 “have”, makes sense, so say the least. Just as any scapegoating strategy makes sense numerically. Hate the (on average) 1 in 1271.
Certainly it is not difficult to imagine that there may be reactions of resentment, envy, anger, and even hatred against the 1 in 1271 whose “Life Is Good”, especially in circumstances where many people are themselves hurting. This appears to be exactly what the Obama campaign is counting on, as the basis of the class warfare and income inequality strategy of its re-election campaign. To harp on, to incite, to exploit such emotions in order to gain votes. Politically, a strategy to find support in the 1271 “have-nots” rather than the 1 “have”, makes sense, so say the least. Just as any scapegoating strategy makes sense numerically. Hate the (on average) 1 in 1271.
The Green Shoots Of Recovery
In the several months since the launch of the income inequality incitement strategy something unexpected appears to be happening – green shoots that the economy is getting better. In less than a month of 2012 the stock market has run up 4%, unemployment has gone down to 8.5%, new jobless claims have fallen to mid and low 300,000’s, and existing home sales appear to be bottoming. So the question becomes: is the economy really getting better? And how far is there to go to get well? Some answers to this question are shown in the nearby charts, listed as Figures 1 to Figures 4.
In the several months since the launch of the income inequality incitement strategy something unexpected appears to be happening – green shoots that the economy is getting better. In less than a month of 2012 the stock market has run up 4%, unemployment has gone down to 8.5%, new jobless claims have fallen to mid and low 300,000’s, and existing home sales appear to be bottoming. So the question becomes: is the economy really getting better? And how far is there to go to get well? Some answers to this question are shown in the nearby charts, listed as Figures 1 to Figures 4.
Historical Record: Labor Force
Participation and Number of Unemployed
Figure 1 (from the Wall Street Journal of January 23, 2012) shows two graphs: Labor force participation (top) and Long Term unemployment (bottom). As shown in the top graph, in most previous recessions the percentage of the population who are working recovered quite quickly (i. e., in months) post-recession. In the present snail-paced recovery, the percentage of the population who are working has actually fallen 3% in the 2 years since the Great Recession was officially declared to be over. Labor participation has actually regressed to 1980 levels. We have far to go to get well.
Figure 1 (from the Wall Street Journal of January 23, 2012) shows two graphs: Labor force participation (top) and Long Term unemployment (bottom). As shown in the top graph, in most previous recessions the percentage of the population who are working recovered quite quickly (i. e., in months) post-recession. In the present snail-paced recovery, the percentage of the population who are working has actually fallen 3% in the 2 years since the Great Recession was officially declared to be over. Labor participation has actually regressed to 1980 levels. We have far to go to get well.
Trend in Long-Term Unemployment Rate
Long-term unemployment, shown at bottom in Figure 1 is notable for the enormous jump in number of people long-term unemployed, an increase of nearly 5.5 million workers. The largest previous jump in this quantity since 1970 was 2 million, and typical recession saw jumps of only 1 million. This has created a large backlog of unemployed people whose skills well have become lost or obsoleted in the 27 or more weeks of unemployment. The latest 8.5% unemployment number is projected to rebound the wrong way (Figure 2), and the long-term component will certainly prove more resistant than previous recession. Still far to go to get well.
Long-term unemployment, shown at bottom in Figure 1 is notable for the enormous jump in number of people long-term unemployed, an increase of nearly 5.5 million workers. The largest previous jump in this quantity since 1970 was 2 million, and typical recession saw jumps of only 1 million. This has created a large backlog of unemployed people whose skills well have become lost or obsoleted in the 27 or more weeks of unemployment. The latest 8.5% unemployment number is projected to rebound the wrong way (Figure 2), and the long-term component will certainly prove more resistant than previous recession. Still far to go to get well.
The Housing Boom and Prospects for
Recovery
Figure 3 illustrates the root cause of the Great Recession, housing. The unconscionable explosion in housing caused by government insistence, through Freddie and Fannie and the Community Reinvestment Act, pushing people to buy into property they could not afford, and creating an environment in which financial instruments were created which were doomed to go bust, is illustrated in the hockey stick rise in the Case-Shiller Residential Real-Estate index. As the chart shows, the rise doubled in value the prevailing index dating back to 1890. The economy can only get well when housing gets well. Years to go, obviously.
Figure 3 illustrates the root cause of the Great Recession, housing. The unconscionable explosion in housing caused by government insistence, through Freddie and Fannie and the Community Reinvestment Act, pushing people to buy into property they could not afford, and creating an environment in which financial instruments were created which were doomed to go bust, is illustrated in the hockey stick rise in the Case-Shiller Residential Real-Estate index. As the chart shows, the rise doubled in value the prevailing index dating back to 1890. The economy can only get well when housing gets well. Years to go, obviously.
Greatest Number Of Americans In Poverty
In History
The number of Americans living in poverty is perhaps the most meaningful measure of the hurt and pain being suffered by families. Figure 4 shows the damage to Americans according to this particular misery index. Again, we see a hockey stick rise in 2007, rising to the current level of 44 million Americans living in poverty today, nearly double the number in 1975, and the largest number in our history.
The number of Americans living in poverty is perhaps the most meaningful measure of the hurt and pain being suffered by families. Figure 4 shows the damage to Americans according to this particular misery index. Again, we see a hockey stick rise in 2007, rising to the current level of 44 million Americans living in poverty today, nearly double the number in 1975, and the largest number in our history.
Conclusion
What this data shows is that we have years to go before we will see a recovery from the Great Recession - by a conservative estimate - 3 years more, on top of the 4 years since the collapse of Lehman in the fall of 2008. Recovery from the Great Depression (1929 – 1939) took longer, and was hastened by WWII. It remains to be seen if we have learned anything since then to help hasten the end of the Great Recession, be it actions of the Federal Reserve, or the wit and competence of the occupant of the White House, who will have been inaugurated a year from today.
What this data shows is that we have years to go before we will see a recovery from the Great Recession - by a conservative estimate - 3 years more, on top of the 4 years since the collapse of Lehman in the fall of 2008. Recovery from the Great Depression (1929 – 1939) took longer, and was hastened by WWII. It remains to be seen if we have learned anything since then to help hasten the end of the Great Recession, be it actions of the Federal Reserve, or the wit and competence of the occupant of the White House, who will have been inaugurated a year from today.
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