An Awfully Bleak Poll

August 28th, 2014 at 8:27 pm

Clearly, there are a lot of people who feel that the economic recovery–over five years old by now, at least by the official count–isn’t reaching them. That’s a central result from a pretty gloomy poll out today from Rutgers University.

I put some thoughts and data together over at PostEverything, showing the gaps between real GDP growth, corporate profitability, the stock market, and middle-class household incomes. As you see, the disconnect kinda jumps out attcha.

exp_indicators

Sources: BEA, Standard and Poors, Sentier Research.

As noted in the WaPo piece, I was struck by this poll result:

poll_hyst

 

You never want to read too much into one poll, but OTEers will recall that this comports with recent economic findings that show precisely this phenomenon: the Great Recession did in fact do very significant damage to growth rates across the globe. One study by Larry Ball that I wrote up a few weeks ago found that the loss of potential output in the U.S. amounted to $7,500 per household.

As I’ve noted elsewhere, I think some of the damage can be repaired, but it will takes numerous years at full employment if that is to happen.

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5 comments in reply to "An Awfully Bleak Poll"

  1. Mike Claxton says:

    So this is where I hope not to be too stupid. Please help me understand median household income. I am thinking this is the amount a household earns regardless of how many people are in the household and how many are working. Maybe part of the reason this is hard for me is that although I sort of know that I am doing better than the rest, I find it hard to believe that others are doing so much worse.

    I sometimes point out how hard it is to reverse engineer life on a median income. Such as saving 10 percent or more for retirement or putting aside 5000 a year into an HSA account or having 25 percent of income for housing. I guess I think the reality I live in is very different than the reality most live in. Yet when I bring this up I mostly get blank stares.


    • smith says:

      Yes, you are correct, household income means just that, total income of everyone working in a unit of housing unit, a family of some type sharing living expenses (so for example, it would separate strangers just sharing an apartment).

      It means a median could be made up of two incomes of $25,000/year (which is about $12.50/hour) or one income of $50,000 (the starting salary of NYC teachers is $45,000). At $100,000 (the top 80th percentile, this could mean one adult making a very good salary, or two adults earning a more modest income).

      It is only coincidental that the number of households is about equal to the number of full time employed workers (mostly households with zero workers such as retirees balance out households with two workers)

      One of the more interesting and important aspects of income distribution (and greatly under reported) is the correlation between the mean (average) number of workers in a household, and income level. The table in the wiki page below suggests very low income is largely a function of an inadequate number of full time household workers and is not really the result of low wages. That has huge policy implications. Average number of workers doesn’t distinguish between working part time or working full time just part of the year.
      http://en.wikipedia.org/wiki/Household_income_in_the_United_States#Household_income


  2. Some guy says:

    It’s much closer to a depression for many people, especially for the unemployed who disappear into ‘missing worker’ status.


  3. Phil Perspective says:

    You never want to read too much into one poll, but OTEers will recall that this comports with recent economic findings that show precisely this phenomenon: the Great Recession did in fact do very significant damage to growth rates across the globe.

    It did significant damage because the elites wanted it to. Just see the disaster that is Europe/EU.


  4. readerOfTeaLeaves says:

    IMVHO, the economy in the US and EU has become far too financialized; finance is a disproportionately large sector of these economies.

    Consequently, if you hold debt, then you can make almost infinite amounts of money. If you try to produce, you are laboring under layers of debt: household debt, government debt, off-balance sheet debt of corporations, college debt, you-name-it.

    Equity has been replaced by leverage; it’s as if the economy has undergone a phase change, but the economists are still using the analytical tools they used for equity. This will not turn out well.


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