Are You Better Off Now Since the Last Time I Asked?
June 14, 2018That’s a riff on the killer question asked by most politicians. And if you believe what you read in the papers or your alternate go-to news source, your answer should be a resounding YES!
It’s difficult to find a dissenting voice about the strength of the US economy in the media. Take the unemployment rate, for example. The customarily sober-minded New York Times went so far as to headline their story about the eighteen-year low of 3.8% in the May report, “We Ran Out of Words to Describe How Good the Jobs Numbers Are.” The lead states, “The real question in analyzing the May jobs numbers released Friday is whether there are enough synonyms for ‘good’ in an online thesaurus to describe them adequately. So, for example, ‘splendid’ and ‘excellent’ fill the bill.”
Either I have a terminal case of cognitive dissonance, or someone’s lying through their teeth with statistics. Or just plain lying.
How can the economy be in such great shape when…
… four in ten Americans can’t cover an emergency $400 expense without borrowing money or selling something.
…40% young adults in their late twenties provide their parents with financial assistance, and over 60% of those who do still live at home.
…almost a third of adults participate in the so-called “gig economy” (e.g. selling on ebay or driving for Uber). For most, this is a side hustle to their regular job to make ends meet.
…60% of working adults don’t think they’re saving enough for retirement, and 25% have no retirement savings or pension whatsoever.
…the above statistics come from the ironically named Report on the Economic Well-Being of US Households, just released by the Federal Reserve. The findings are corroborated by a recent United Way survey that revealed that more than 40% of households, over 50 million in total, don't earn enough to afford a monthly budget that includes housing, food, child care, health care, transportation, and a cell phone, and that 66% of jobs in the US pay less than $20 an hour.
The list of dire economic facts could go on and on and include the continuing increase in corrosive income inequality, declining home affordability and ownership, a record low savings rate, soaring personal debt, especially student and auto loans, and thousands of retail store closings and bankruptcies. Add the knock-on effect of the opioid epidemic, and you have to be fat, dumb, and happy not to see that something is seriously out of whack.
To assess how out of whack the official narrative might be, take a look at John Williams’s website, Shadow Government Statistics. Williams does believe that the Bureau of Labor Statistics is fudging the numbers by changing the definition of what they measure.
The chart above shows the official BLS unemployment rate of 3.9% in April (red line), compared with the broader rate of 7.8% (gray line), the so-called U-6, which includes short-term discouraged workers and other marginally attached workers, such as those who are unwillingly working part-time.
But the real eye opener is the site’s projected unemployment rate of 21.5% (blue line), which includes an estimate of long-term discouraged workers, who were dropped from the statistics in 1994 when the definition of “unemployed” was changed. This higher estimate surely reflects the many millions of working-age adults who have officially left the labor force since the onset of the last recession in 2007, a well-reported trend. Importantly, that higher unemployment number, which has historically followed the trend of the other rates, is not falling at anywhere nearly as fast as the official numbers are, suggesting that there is no easy fix.
I have no way of knowing how accurate Williams’s estimate is, but it sure feels closer to the truth than the Fed’s rosy pronouncement. And it might explain how with record-low official unemployment, wages have hardly budged.
So words are powerful after all. They way we define the unemployed certainly informs the economic narrative. And just maybe words can also be powerful in calling attention to the truth, that stock market valuation aside, the continuing news reports of a booming Time of Trump economy may be largely wishful thinking. And of course, if and when the market tanks with a Trump Dump, we’ll be certain to quickly find more and different words to explain it.
Many of you are probably wondering why my blog went dark after the Washington Writer’s Conference. It wasn’t because I was so depressed by the response to my pitch for my latest novel, The Eleventh Grieve. Actually, quite the opposite. Of the four agents I met with, three requested partial manuscripts. I sent them off immediately, and decided that I needed to spend some quality time with the rest of the novel, just in case they requested more. Well, I’ve almost completed those revisions, but I haven’t received any follow-ups, either positive or negative. So I guess I’m on lit biz time, waiting to hear anything!