The Recovery Is Better Than Romney Would Like It To Be

October 18th, 2012 at 2:25 am

The challenger will always try to talk down the economy.  Even back in 1996, when jobs, growth, and even middle-class incomes were really taking off, candidate Bob Dole was trying to convince everyone that things were bad and getting worse.

It is, of course, a much closer call now, but still, I doubt that Gov. Romney’s assault on the recovery in last night’s debate resonated as much as he’d like it to.  And I think Greg Sargent is right here: team Obama should continue to push back on this point, particularly re housing, which didn’t come up at all last night.

All three major home price indices are up and the 30-year mortgage rate is at an all-time low.  This combination of home price appreciation and low rates has allowed more homeowners to refinance, lowering average annual mortgage payments by around $2,200.  Housing starts got a big pop this AM, hitting their strongest stride since 2008, and while the monthly data are volatile, there are signs that the inventory overhang in housing is much diminished.

Last month, auto sales hit a four year high, with annualized sales just below 15 million, the highest sales count since March 2008.  Since GM and Chrysler have emerged from their government-structured bankruptcy, the industry’s added almost 250,000 jobs.

Unemployment, 10% three years ago, is 7.8%–still too high, but moving in the right direction.  Mitt’s got a point re the depressed labor force participation rate, but he’s all stuff and malarkey if he really thinks that explains all, or even half, of the progress on unemployment.   Employment growth accelerated notably in the third quarter of the year relative to the second (see first figure here).  Still, despite the momentum, the jobless rate is too high to boost workers’ bargaining power and you can see that in paychecks.

Obviously we’re far from out of the woods, including housing.  GDP’s growing barely at trend, unemployment’s still too high, and millions of foreclosures remain in the pipeline, though foreclosure filings are at the lowest level since July 2007, according to RealtyTrac.

So it’s a mixed bag, but nothing like the dark picture that Gov Romney and his supporters have been trying to paint.  We’re slowly sailing out of a storm.  Too slowly, IMHO, due to the refusal of policy makers other than Bernanke and Co., to put some policy-induced wind in the economy’s sails.

But I suspect there’s NCD—nontrivial cognitive dissonance—between Romney’s portrait of the economy and many people’s experience of it, especially around some of the more tangible aspects, like housing values and mortgage rates.  When Sen Dole tried to convince people otherwise back in 1996, it was a huge loser for him.  The timing isn’t nearly as supportive for the President, as he’s faced down a much deeper and more intractable recession, and done so with the opposite of cooperation from Congress.  But the truth is that things are slowly getting better and Romney’s claims to the contrary may be drowned out by this reality.

Toles, as usual, summarizes all the above perfectly:


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4 comments in reply to "The Recovery Is Better Than Romney Would Like It To Be"

  1. save_the_rustbelt says:

    CNBC is blathering this morning about a boom in Ohio. Huh?

    Ohio and Michigan are slightly better than previous, but both are a long long way from booming or even a decent recovery. Significant problems with residential real estate, commercial real estate, number of jobs and quality of jobs.

    Even Columbus, the “recession proof” city, is still weak compared to its historical strength (my experience there spans 4 decades).

    And then there are the structural issues from the mad rush to globalize.

    • Ryan Simon says:

      Columbus proper seems to be booming well enough. There are tens of millions of dollars worth of commercial realestate development going in in the Arena District, the Brewery District, the Short North and Campus. Columbus has gained a net 70,000 residents many of them young professionals. Please stop stealing all this prosperity from the rest of us.


      Dayton (at least we aren’t Toledo)

  2. Ryan Simon says:

    I discuss cognitive dissonance a lot with people when we talk about politics. I like to observe the various coping mechanisms that people use to deal with the discomfort of cognitive dissonance, and the “tells” in their body language. I love the term NCD and will probably start using it. I’ll tell people I went to Jared when I cite it’s origin. Thanks for the articles. Keep them coming.

    • Jared Bernstein says:

      The DC rule on this is: First time you use it, you cite the person. Second time, you say “someone said…” Third time et al, it’s yours!