One of the luckiest people on earth last week was the person at the Associated Press who began a Thursday report by telling readers: “Out of a seemingly hollow recovery from the Great Recession, a more durable if still slow-growing U.S. economy has emerged.”
Translation: “This ‘new normal’ economy President Barack Obama and the left have created is as good as it’s going to get. So learn to like it.”
Ordinarily, the perpetrator of such nonsense would have been known and subjected to the relentless personal ridicule he or she deserves. But this is the week the AP’s union, the News Media Guild, upset that its members have been working without a contract for almost eight months after a year of negotiating, began a series of childish “multiple protests” they think will cause the news co-op “to start bargaining in good faith.” (The News Media Guild’s militance largely explains why the AP’s coverage of labor-related matters is so routinely biased.)
One of those “protests” was “a four-day byline and credit boycott” by reporters and photographers who refused to put their names on dispatches and photos submitted from Tuesday through Friday. The tortured statement which opened this column came out smack dab in the middle of that boycott, which the union hilariously described as “a sacrifice.”
Even the AP reporter’s admissions concerning how weak the economy’s performance has been under President Barack Obama were watered down.
The article’s assertion that “in the five years since the recession officially ended, Americans’ pay has basically stagnated” is rubbish. The Census Bureau alumni who run Sentier Research tell us that inflation-adjusted median household income, a far more comprehensive indicator of financial well-being, is still about 3 percent below where it was in June 2009 when the recession officially ended, and has basically gone nowhere since late 2011.
The reporter further claimed that “economic growth is merely plodding along.” Wrong. To be “plodding along,” you have to be moving forward. The government’s last official reading on economic growth told us that it contracted by an annualized 2.9 percent in the first quarter. The economy’s growth performance has been barely better than that seen during the awful post-Depression 1930s. Very few economists believe that any second-quarter growth will offset the first quarter’s dive, meaning that we’ve gone nowhere so far this year.
The incredibly lucky anonymous AP reporter cited five “newfound strengths” the economy has developed. I will show that each either is a weakness, or masks one.
“Fewer people are piling up credit card debt or taking on risky mortgages.”
The reporter cited a $1,618 reduction in “typical household” credit card debt. Unfortunately, that decline has been far more than offset by an average increase in per-household student loan debt of roughly $3,000. Meanwhile, student-loan delinquencies are going through the roof.
Thursday’s awful new-home sales report and a level of existing-home sales which is still far from where it should be show that fewer people are taking on any kind of mortgage, “risky” or not.
“Banks are more profitable and holding additional cash …”
Banks are holding that cash because they can’t find borrowers. Despite low interest rates, demand for loans, especially to businesses, is lagging. That’s because the opportunity-constraining, growth-choking POR (Pelosi-Obama-Reid) economy of the past six years has led to fewer new business startups, fewer employed by those startups in comparison to previous periods, and an intimidating Dodd Frank-driven regulatory environment.
“More workers hold advanced degrees.”
The AP reporter claimed that this is supposedly good, because “education typically leads to higher wages and greater job security,” and celebrated the fact that “during the recovery, the number of Americans with a college degree surpassed the number with only a high school diploma for the first time.”
Sadly, we don’t live in typical times, and there’s little cause for celebration. The following graph from a just-published Federal Reserve Bank of San Francisco study shows what may be a permanent break in that education-wage relationship (“full-time” label added by me for emphasis):
For five long years, the starting salaries of college graduates landing full-time jobs have gone nowhere (the figures presented above are not inflation-adjusted). The study’s authors further note, with a supporting table, that “with few exceptions, wage growth has been limited in all occupational groups for recent graduates.”
Especially after considering the explosion in student-loan debt, it’s long past time to question the still-ironclad assumption that a college education pays off, and that going to college should be the default goal of every high school student.
“Inflation is under control.”
This triumphal statement is supposed to be a rebuttal to the Rick Santellis of the world who have worried and continue to be concerned about inflation because of the over $4 trillion in money out of thin air Ben Bernanke and Janet Yellen have created.
As I wrote earlier this month:
… [L]ook at what was “accomplished” to cause that (low inflation): real hits to household income, which is stuck far below where it was in 2007, and millions of Americans withdrawing from the workforce. Both of these have dampened demand for goods and services and lessened price pressures. Meanwhile, the government during Obama’s presidency has run up over $5.7 trillion in deficits (through June) while adding just under $7 trillion to the national debt (through July 14), immorally pushing the obligation to pay for our profligacy onto generations yet unborn.
Does inflation being “under control” now merely mean that any coming hyperinflation will be that much worse? The AP reporter has no historical basis for his or her “under control” overconfidence.
“Millions who have reached retirement age are staying on the job.”
Seriously, this is a good thing? What this really means is that many Americans who thought they had their financial situations under control so they could spend their retirements as they had planned have found themselves unable to do so.
This trend has also worked to keep many young people with unproven or non-existent work records from gaining employment.
Imagine the reaction if an AP reporter tried to portray this development as a positive during a Republican or conservative administration.
This anonymous reporter and his or her colleagues at the AP and elsewhere in the establishment press can apply as much lipstick as they’d like to this economy. It won’t change the fact that it remains ugly for the average American, and promises to remain that way as long as Barack Obama occupies the White House.