5 Reasons Americans Are Worried About the Economy

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The U.S. economy isn’t broken. But many Americans believe otherwise. Although the Great Recession officially ended in June 2009, the recovery has been sluggish. While there are many positive signs, millions of Americans are unhappy with economic conditions. A February 2016 Gallup poll found the economy to be the most important issue Democrats want to see addressed by the next president; for Republican voters, it was tied with immigration and national defense as the most important issue. It’s perhaps little wonder the economy has fueled the unexpected rise of populist candidates Donald Trump and Bernie Sanders. Here are five signs of lingering economic woes in the U.S. economy.

 

5. Millions Are Underemployed or Have Left the Job Market

The traditional measure of unemployment doesn’t count millions who are chronically unemployed or under-employed. © Martha Soukup

The traditional measure of unemployment doesn’t count millions who are chronically unemployed or underemployed. © Martha Soukup

President Barack Obama and many economists cite the low unemployment rate as a leading sign of economic recovery. That 5.0 percent rate (as of this writing) sounds wonderful, but there is a major flaw in the data — it doesn’t count millions of Americans who are either hopelessly underemployed or who have dropped out of the job market. As Gallup CEO Jim Clifton explained in a commentary in early 2015, “If you, a family member or anyone is unemployed and has subsequently given up on finding a job — if you are so hopelessly out of work that you’ve stopped looking over the past four weeks — the Department of Labor doesn’t count you as unemployed. That’s right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news.

Clifton continues, “Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren’t throwing parties to toast ‘falling’ unemployment. … There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.”

A better measure of unemployment, the U-6 Unemployment Rate, measures total unemployed, “plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.” That rate for March 2016 was 9.8 percent.

 

4. Current Economic Recovery is Weakest in More Than 50 Years

President Barack Obama has overseen the weakest recovery of any recession in more than 50 years. Credit: White House/Chuck Kennedy

President Barack Obama has overseen the weakest recovery from any recession in more than 50 years. Credit: White House/Chuck Kennedy

The Congressional Joint Economic Committee issued a report in December that labeled the current economy the worst recovery from any recession in more than 50 years. One measure that stands out is the weak growth in real GDP since the recession ended in June 2009. Since 1960, there have been seven recessions lasting longer than six months; in the first six, the real GDP growth in the first 25 quarters of recovery averaged 27.0 percent; in the current recovery, real GDP grew 14.3 percent during that same period, the worst performance of any recovery. To put that in real dollar terms, National Review estimated earlier this year that if the current recovery had performed as well as the recovery under President Ronald Reagan in the early 1980s, “every American would have accumulated an extra $21,306 since June 2009.”

Of course, the Great Recession was the worst U.S. financial crisis since the Great Depression. And both the American economy and global economic conditions are much different today than they were 30 or 50 years ago. Many of those chronically unemployed and underemployed blue-collar workers attending Trump and Sanders rallies are pining for lucrative manufacturing jobs that will never return to America. Yet that doesn’t explain away all of the weak data in this recovery. As JEC analyst Jeff Schlagenhauf noted in the report, “The Obama recovery has failed hardworking Americans. On economic growth, private-sector job creation, and income growth, the Obama recovery ranks far below average.”

 

3. Labor Force Participation Rate is Lowest Since 1970s

Credit: Federal Reserve Board of St Louis/U.S. Bureau of Labor

Participation in the workforce is at almost a 40-year low. Credit: Federal Reserve Board of St Louis/U.S. Bureau of Labor

This is a number that is often grossly misrepresented in the media. One common figure mentioned is that more than 90 million Americans over the age of 16 are out of the workforce. That is misleading, as more than 40 million of those people are over the age of 65, and hopefully enjoying their retirement. Millions of others who are 25 and under are still in high school or college. Others are disabled. And of course, there are stay-at-home moms and dads who have willingly left the workforce to care for children.

The best guess is that somewhere around 30 million people are involuntarily out of the workforce because they are not able to find work, or work in their field. The federal government measured the labor force participation rate at 63 percent through March 2016. While that’s a slight improvement over the numbers from 2015, it’s the lowest participation rate since the late 1970s.

 

2. Income Inequality Has Grown During the Recovery

Growth in middle class income has slowed since the 1970s. Credit: Economic Policy Institute, Bureau of Labor Statistics

Growth in middle class income has slowed since the 1970s. Credit: Economic Policy Institute, Bureau of Labor Statistics

Income inequality in the U.S. is nothing new. Generally speaking, the post-World War II period witnessed strong growth in income for all levels. In the 1970s, growth slowed and inequality began to grow between the top earners and the lower class. Statistics from the Economic Policy Institute show that between 1979 and 2007, the top 1 percent of earners received more than half (53.9 percent) of the total increase in U.S. income. That trend has accelerated during the recovery; EPI found that, between 2009 and 2012, in 39 states the top 1 percent of earners took home between half and all income growth.

Income inequality has traditionally been a Democratic issue; recall how GOP presidential candidate Mitt Romney said in 2012 that “envy” and “class warfare” were fueling concerns about inequality. Yet it’s become such a concern for voters in the upcoming election that GOP candidates talked about the issue in debates and speeches. It’s worth noting, however, the two sides vigorously disagree on how to reverse the trend. Both Hillary Clinton and Bernie Sanders have called for raising the national minimum wage. GOP candidates have opposed a wage hike, and instead have proposed tax cuts and less government regulation to solve the issue.

 

1. Household Income Is Even Lower Than During Great Recession

Credit: Federal Reserve Board of St Louis/US. Census Bureau

Real household income has not bounced back to where it was before the Great Recession. Credit: Federal Reserve Board of St Louis/US. Census Bureau

Indicators such as the unemployment rate, GDP growth and manufacturing orders are invaluable measures for analysts to judge the strength of the economy. They mean nothing to most Americans. But people can and do measure their economic health by the size of their paychecks. And in this regard, the economy is performing even worse in early 2016 than it did during the Great Recession. Real median household income stood at $53,657 for 2014, in inflation-adjusted 2014 dollars. At the depth of the Great Recession in 2008, it was $55,313. Even worse, in 1999, the real median household income was $57,843, the high-water mark since the Census began measuring this statistic 30 years ago. There are so many factors behind this, it’s a story for another day. But when many Americans complain that they don’t feel like they’re doing as well as they were a few years ago, charts like this quantify that belief.

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The author is a longtime professional journalist who has interviewed everyone from presidential contenders to hall of fame athletes to rock 'n' roll legends while covering politics, sports, and other topics for both local and national publications and websites. His latest passions are history, geography and travel. He's traveled extensively around the United States seeking out the hidden wonders of the country.