Obama’s Illusionary Economic Recovery
The big news from [last] week’s State of the Union address is that the economic “crisis is over.” Apparently, we’ve been rescued from a second Great Depression and everything this president has done to fix the economy has worked. All that was missing from Mr. Obama’s celebration was the old “Icky Shuffle” end zone dance. This no doubt came as a bit of a shock to voters since the economy has been sickly for a long, long time. As recently as this fall, half of Americans were saying that the country is still in recession. Conditions have improved in the last six months for sure, with growth accelerating, inflation low and stable, hiring picking up and gas prices tumbling.
The big news from [last] week’s State of the Union address is that the economic “crisis is over.” Apparently, we’ve been rescued from a second Great Depression and everything this president has done to fix the economy has worked. All that was missing from Mr. Obama’s celebration was the old “Icky Shuffle” end zone dance.
This no doubt came as a bit of a shock to voters since the economy has been sickly for a long, long time. As recently as this fall, half of Americans were saying that the country is still in recession.
Conditions have improved in the last six months for sure, with growth accelerating, inflation low and stable, hiring picking up and gas prices tumbling.
Still, if things are as good as the White House says they are, why do we feel so bad? Why are we collectively so worried about the fragile future of our nation?
One answer is that the conventional statistics of economic conditions for families aren’t measuring the real hardships families are facing today. Is there anyone on this continent, who really thinks that the unemployment rate is 5.6 percent?
But here are a dirty bunch of hidden indicators pointing to an American economy that may be in a lot worse shape than Washington is telling us:
The $1 trillion growth gap. This economic recovery is the slowest in 50 years. If we had had the same pace of improvement since June 2009 when the recession ended as in an average recovery, national output and incomes would be more than $1 trillion larger today. In other words, we would have about $10,000 more income per family than we do.
The raiseless recovery. It’s been 10 years since Americans in the middle class got a pay raise that kept pace with inflation. Median income households today make $1,500 less than they did even since the recession officially ended. The recession really hasn’t ended for half of all families.
The myth that inflation is dead. By looking at what middle-income families have to buy – food, energy, tuition and health care – prices have been running two to three times the official rate. Low gas prices recently are helping, but health costs are rising again – despite the Obamacare promise to bend the cost curve down. Oops.
Inequality is worse. President Obama has made closing the gap between rich and poor his highest priority. Guess what? The Gini coefficient (as measured by the Census Bureau), the left’s favorite measure of income inequality, rose each of Mr. Obama’s first four years in office, breaking all-time highs in both 2011 and 2012, and it remains high.
Where are the new small businesses? According to an analysis by the Kauffman Index of Entrepreneurial Activity, the rate of business creation dipped to just 0.28 percent of all adults in 2013. It’s been since 2001 that business creation rates were this low. The latest available data from the Census Bureau (2012) shows business creation only slightly rebounding from the recession lows.
The American dream goes bust. A 2014 Pew Research Poll found only 34 percent of Americans think their children will be better off than they are. This pessimism contrasts sharply with Mr. Obama’s rosy scenario.
The debt has grown by $7.3 trillion. When Mr. Obama entered office the national debt was under $11 trillion. Now it’s more than $18 trillion – more than $120,000 for each worker. It will be $19 trillion when he leaves office. Mr. Obama has added more debt to the nation than every president from George Washington through Bill Clinton. Who will pay these bills?
The kids are not all right. The percentage of Americans under 25 who are in the workforce has fallen to its lowest level since the early 1970s – and that was before women started entering the workforce in very large numbers. The percentage of Americans from 25 to 29 in the workforce is at the lowest level dating back to 1982 – the earliest data is provided by the Bureau of Labor Statistics. The real unemployment rate in America is near 10 percent when accounting for these lost workers who have given up.
Families are still breaking up. A key to a healthy economy and rising incomes is keeping families intact. But marriages are breaking up and there is almost universal agreement that a big contributor to poverty is family break-up. Children living in homes without a father present are more than three times likely to live in poverty than intact families. Marriage is one of the greatest anti-poverty programs. W. Brad Wilcox of the American Enterprise Institute and Robert I. Lerman of the Urban Institute estimate that “young men and women from intact families enjoy an annual ‘intact-family premium’ that amounts to $6,500 and $4,700, respectively, over the incomes of their peers from single-parent families.” Yet since 1970, the percentage of children living in single-parent households has skyrocketed from near 12 percent to more than 25 percent. The unwed birth rate has remained at all-time highs of near 40 percent – a jump of nearly 10 percentage points since 2000.
Entitlement spending will nearly double. Spending on Social Security, Medicare, Medicaid and Obamacare is expected to nearly double in 2024 compared to 2013.
Americans aren’t breaking out the champagne because they instinctively realize that an economic recovery built on trillions of dollars of debt, overspending, and trillions more in easy money is a house of sand. Mr. Obama’s only economic idea is to redistribute wealth via ever-rising taxes from the productive class and the job creators to everyone else. If Republicans let him, things will get worse for everyone before they get better.
Republished from The Heritage Foundation.
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