Op-Ed =>> Social Impact

What is Wrong with the U.S. Economy?


When you are in the eye of a hurricane, it is extremely peaceful and normal. However that does not last. When you are in the worst of a storm it is difficult to imagine an end, even as you speculate on the causes. Today the U.S. economy is far from healthy and far from recovered. Yet our collective memories have a way of deluding us from the travails from which we have come and made imaging a better future difficult. The U.S. economy has many things right that are worthy of mentioning. Since early February 2009, over 4 million private sector jobs have been created.

Since mid 2009, real Gross Domestic Product (GDP) the most widely used measure of economic activity, has increased after more than two and a half years of rapid decline. Since 2009, U.S. exports have increased from $1.5 trillion to over $1.8 trillion today. Since 2009, after tax corporate profits have increased from $1.1 trillion to almost $1.5 trillion. Profits among U.S. manufacturing have more than doubled over the same period. Since the trough of the recession in late 2009 when the NYSE Index bottomed out 6,091, the index has recovered over 2000 points. So what is wrong with the U.S. economy and the direction it is headed.

The answer to this question has a lot to do with perspective. Clearly one of the most important drivers of that perspective is whether or not you are currently employed. The labor market has not recovered. In 2007 there were 146 million Americans working. Today there are about 142 million workers employed. At the worst of the recession, total employment had fallen to 139 million. One thing we know about employment is that these numbers tend to lag behind the condition of the overall economy. So while stocks, profits and GDP started to recover in 2009, it was not until mid 2010 that we began to see movement in the labor market. It was not until mid 2011 that the unemployment rate cracked the 9.0 level. Just last week (6/1/12) the Labor Department released the disappointing news that unemployment had stopped its 11 month decline. Whether this is a temporary blip or an indication of a reversal is too early to tell, but it is troubling nonetheless.

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