unemployment has come down from more than 12 percent in 2013 to a bit over 10 percent.
.. he suggested that we compare low interest rates to the insulin injections that diabetics must take.
.. It’s notable that in Spain, which these days is being touted as a success story, youth unemployment is still an incredible 45 percent.
.. And there’s nothing in reserve to deal with a fresh shock. Suppose that Greece blows up again, or the British public votes to leave the European Union, or China’s economy goes off a cliff, or whatever. What could or would European policy makers do to offset the blow? Nobody seems to have any idea.
The thing is, it’s not hard to see what Europe should be doing to help cure its chronic disease. The case for more public spending, especially in Germany — but also in France, which is in much better fiscal shape than its own leaders seem to realize — is overwhelming.
There are large unmet needs for infrastructure and investors are essentially begging governments to take their money. Did I mention that the real 10-year interest rate, the rate on bonds that are protected from inflation, is minus 0.8 percent?
Why Is Productivity So Weak? Three Theories
From 2011 through 2015, the government’s official labor productivity measure shows only 0.4 percent annual growth in output per hour of work. That’s the lowest for a five-year span since the 1977-to-1982 period, and far below the 2.3 percent average since the 1950s.
.. During the 2008 recession, labor productivity soared. Was this because employers laid off their least productive workers first? Because everybody worked harder, fearful for their jobs?
.. Think about a business that is investing for the future. It hires a bunch of people and opens new offices and builds new factories. But while it is doing all that stuff, its actual productivity is quite low. It has a lot of people working a lot of hours, but very low economic output until its operations are fully up to speed.
President Obama Weighs His Economic Legacy
Eight years after the financial crisis, unemployment is at 5 percent, deficits are down and G.D.P. is growing. Why do so many voters feel left behind? The president has a theory.
“If you ask the average person on the streets, ‘Have deficits gone down or up under Obama?’ probably 70 percent would say they’ve gone up,” Obama said, with some justifiable exasperation — the deficit has in fact declined (by roughly three-quarters) since he took office, and polls do show that a large majority of Americans believe the opposite.
.. Obama is animated by a sense that, looking at the world around him, the U.S. economy is in much better shape than the public appreciates, especially when measured against the depths of the financial crisis and the possibility — now rarely even considered — that things could have been much, much worse.
.. The budget deficit has fallen by roughly $1 trillion during his two terms. And overall U.S. economic growth has significantly outpaced that of every other advanced nation.
..A large swath of the nation has dropped out of the labor force completely, and the reality for the average American family is that its household income is $4,000 less than it was when Bill Clinton left office.
.. Many within Bush’s own party were supporting an alternative bill that was focused on mortgage-asset insurance and tax cuts. But Obama, convinced that anything short of a major bailout could lead to economic catastrophe, said Democrats should back Paulson’s plan. They did.
It was a rare moment of bipartisanship, with long-term political consequences. To Obama, this was a necessary alliance with Wall Street and a Republican president. To many others, it looked like a sweetheart deal for the same people who created the mess ..
.. “The whole thing about financial crises is the tools that work are the ones that will make you look like you’re in bed with the banks,” said Timothy Geithner, an architect of TARP whom Obama made his Treasury secretary.
The Secret Shame of Middle-Class Americans
Nearly half of Americans would have trouble finding $400 to pay for an emergency. I’m one of them.
The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all.
.. “You are more likely to hear from your buddy that he is on Viagra than that he has credit-card problems,” says Brad Klontz, a financial psychologist
.. Part of the reason I hadn’t known is that until fairly recently, economists also didn’t know, or, at the very least, didn’t discuss it. They had unemployment statistics and income differentials and data on net worth, but none of these captured what was happening in households trying to make a go of it week to week, paycheck to paycheck, expense to expense.
.. So if you really want to know why there is such deep economic discontent in America today, even when many indicators say the country is heading in the right direction, ask a member of that 47 percent.
.. A 2014 Bankrate survey, echoing the Fed’s data, found that only 38 percent of Americans would cover a $1,000 emergency-room visit or $500 car repair with money they’d saved.
.. There isn’t much net worth to draw on. Median net worth has declined steeply in the past generation—down 85.3 percent from 1983 to 2013 for the bottom income quintile, down 63.5 percent for the second-lowest quintile, and down 25.8 percent for the third, or middle, quintile.
.. A family in the middle quintile, with an average income of roughly $50,000, could continue its spending for … six days. Even in the second-highest quintile, a family could maintain its normal consumption for only 5.3 months.
.. the study by Lusardi, Tufano, and Schneider found that nearly one-quarter of households making $100,000 to $150,000 a year claim not to be able to raise $2,000 in a month.
.. That effectively let big national banks issue credit cards everywhere at whatever interest rates they wanted to charge, and it gave the banks a huge incentive to target vulnerable consumers just the way, Emmons believes, vulnerable homeowners were targeted by subprime-mortgage lenders years later.
.. With the rise of credit, in particular, many Americans didn’t feel as much need to save.
.. The personal savings rate peaked at 13.3 percent in 1971 before falling to 2.6 percent in 2005. As of last year, the figure stood at 5.1 percent, and according to McClary, nearly 30 percent of American adults don’t save any of their income for retirement.
.. in general, the more sophisticated a country’s credit and financial markets, the worse the problem of financial insecurity for its citizens.
.. I never wanted to keep up with the Joneses. But, like many Americans, I wanted my children to keep up with the Joneses’ children, because I knew how easily my girls could be marginalized in a society where nearly all the rewards go to a small, well-educated elite.
.. and because—another choice—we believed they had earned the right to attend good universities, universities of their choice, we found ourselves in a financial vortex. (I am not saying that universities are extortionists, but … universities are extortionists.
.. I was making exactly what I had made 20 years earlier. And I wasn’t alone. Real hourly wages—that is, wage rates adjusted for inflation—peaked in 1972; since then, the average hourly wage has essentially been flat. (These figures do not include the value of benefits, which has increased.)
.. In a 2010 report titled “Middle Class in America,” the U.S. Commerce Department defined that class less by its position on the economic scale than by its aspirations: homeownership, a car for each adult, health security, a college education for each child, retirement security, and a family vacation each year.
.. A 2014 analysis by USA Today concluded that the American dream, defined by factors that generally corresponded to the Commerce Department’s middle-class benchmarks, would require an income of just more than $130,000 a year for an average family of four.
.. A 2014New York Times poll found that only 64 percent of Americans said they believed in the American dream
.. I suspect our sense of impotence in the face of financial difficulty is not only a source of disillusionment, but also a source of the anger that now infects our national politics, an anger that gets displaced onto undocumented immigrants or Chinese trade or President Obama precisely because we are unable or unwilling to articulate its true source.