View Why So Many Hate This Recovery
There are three main reasons for the pessimism.
Bloomberg, November 16, 2015.
\There has been a steady drumbeat of dissatisfaction about the post-credit-crisis recovery. No matter how much the economy improves, a good number of people insist it hasn’t. Now, in the midst of the political silly season, it has intensified as candidates pander to voters.
This is a subject near and dear to me (see this, this, this, this, this, andthis), and it came up again recently in a FiveThirtyEight column with the headline, “The Economy Is Better — Why Don’t Voters Believe It?“The column tells of a local business owner whose company is having a “record year.” Despite this, she is the leader of a local Tea Party group, whose view of the U.S. economy is, well, at war with the facts. “The Federal Reserve is devaluing the dollar” she said, despite the U.S. currency being the strongest in almost 13 years. “Inflation is too high,” even though it is running at less than 2 percent. “Taxes are too high,” even though most people pay some of the lowest effective rates in decades. And those statistics showing improvement in the economy? They are “misleading if not outright lies . . . The unemployment rate isn’t down.” Of course, at 5 percent it’s the lowest in seven years.
Some of the discontent is understandable and three important factors are at work: The benefits of the recovery haven’t been spread evenly; there is noise in the numbers; and plain old ignorance. I place these three in order of declining legitimacy. Let’s jump right in:
An uneven recovery: For many people, the rebound from the 2008-2009 credit crisis has been mediocre or nonexistent. These folks are not delusional — their personal situations are bad. There are still too many people either unemployed or underemployed, and many workers haven’t had pay increases that keep up with even the country’s minimal inflation. Meanwhile, two of the biggest costs of living — housing and health care — have far outpaced wage gains.
When we look at how key factors affect the state of your personal recovery — three stand out: industry, education and geography. It is clear that some people have been enjoying a very robust recovery, while others have not. The major coastal cities, the industrial heartland and (up until the price of oil collapsed a year ago), the energy producing regions, have been booming.
Consider this from the latest Bureau of Labor Statistics report: People with bachelor degrees or higher have an unemployment rate of 2.5 percent; for those without a high school diploma, it’s 6.8 percent (and that’s down from much higher). If you are in what the BLS describes as professional and related occupations such as “management, business, and financial operations,” your unemployment rate is 2.2 percent. A labor market that tight usually means more competitive wages. The labor participation rate is very telling: 74.3 percent for degree holders versus 44.8 percent for high school dropouts.
I would love to find or create a chart showing how uneven this recovery is compared with earlier ones. I suspect it might yield some interesting results.
Misleading Noise: The second factor is the relentless noise that is generated by the Internet, the news media and the jostling by the presidential candidates for political advantage. I don’t care about your party affiliation or ideology or favorite candidate, but combining politics with investing is a giant money loser.
Yet, the airwaves (to use an anachronistic phrase) are filled with a relentless fire hose of uninformed opinion, biased commentary and failed analysis. It is a constant battle to separate signal from noise in the news media, to say nothing of what passes for information on the Internet.
Humans function with cognitive biases and flawed wetware, and they are easily fooled and manipulated. Relying on your brain for off-label use is a persistent issue for investors.
Ignorance: This is as old as humanity. There are plenty of folks (like the business owner quoted above) who don’t want to know the truth. We all live in a subjective reality of our own construction, loosely connect to the real world. But beyond a certain point that tenuous tie to the objective universe breaks down. After that, a person is living in a wholly fabricated reality. It should come as no surprise that those who drink deeply from certain information sources have a natural affinity for nonsense. They sound just like the woman having a record year who complains about how awful the economy is.
The good news — at least for the more rational among us — is that the Internet never forgets. It is very easy to learn who has a track record of horrific advice and bad predictions and other absurdities.
Don’t expect the foolishness to stop anytime soon, especially as the political campaigns heat up. All you can do is be smart about it, and not let it affect your portfolio or trading.
Originally published here: Why So Many Hate This Recovery
ODS — Obama Derangement Syndrome Explains Most of It
Most, if not all, Tea Party folks have a visceral hatred of President Obama just as 80 years ago conservatives hated FDR. The difference is that FDR welcomed their hatred and battled them relentlessly. Obama has tried to reason with them to no avail.
However, wages have stagnated, real household income is less than 7 years ago, new home sales are less than 50 years ago, etc. So the recovery is mediocre and Congress is more interested in balancing the budget than investing in American infrastructure and people. IOW, our priorities in this recovery have been significantly wrong and nothing is changing to fix it.
You don’t have to go all the way back to FDR. Bill Clinton was absolutely hated by conservatives. So much so that they impeached him! Of course, he was also hated by a smaller faction of light switch liberals, same with Obama, who think a president can just flip on new social policies as if there isn’t Congress and a legal system to deal with.
I laughed when you said Congress is interested in balancing the budget. No they aren’t! The “budget balancers” just want to cut social programs. Otherwise, these people would have balanced the budget under Reagan, Bush I, and Bush II. We had a balanced budget under Clinton and these people threw it away on tax cuts for the rich as soon as Bush II came into power. Even today their budget proposals are all right wing budget porn rather than basic math.
true it seems that the out of power party is the one who wants to balance the budget. and usually by doing that by getting it from others. some times they do get that right, but usually its just politics to be forgotten until they loose power. again
If you want to find good you can find good and if you want to find bad you can find bad. That is true for every single year as long back as there has been data. For those who have a specific narrative and consider data as something that is supposed to support a narrative it is very easy to cement themselves into a specific “reality”. If humans could get over their wetware malfunctions we would have a debate about what is still a “problem” and how do we use previous experiences to come up with a solution. Well maybe when the robots take over the world.
Well yeah, except the Republicans are full of shit.
Two real issues that need more coverage by you.
One, you need to dig deeper on issues of workers whom are over the age of 50. Many of these workers in the last ten years have been replaced by technology and the relentelss desire to cut costs at the expense of service(brand). Twenty years ago income maximation occured in your 50’s and you still had the opportunity to work into your 60’s. This let you pay for education and finish paying for your housing. Now as you hit your 50’s if you lose your job it is damn near impossible to find employment that pays as much and offers health insurance. This loss of income has trmendous consequences for the eocnomy as a whole and the family finances. Add in the fact that for the most part people are leaving longer…….
Two, disappearance of high paying jobs for high school graduates. The refusal of the American Taliban to even discuss infrastructure reebuilding.
I agree with you that these issues should be talked about, but what solution do you propose? Age discrimination is already illegal for people 40 and over… sure, try to get that enforced and all, but hey… it’s illegal so no one does it, right?
The real question is should we keep older workers employed longer or should we open those jobs to a younger generation? I don’t think there is a hard rule here, but I would say instead of focusing on allowing older workers to keep their jobs, we should focus on getting them to a guaranteed and comfortable retirement sooner.
There is nothing immoral about enjoying life outside of work, but you’d be hard pressed to tell by a lot of people’s attitudes.
Feel free to invest in businesses that give jobs to High School Graduates and fifty year olds.
Put YOUR money where YOUR mouth is.
If you want an efficient economy those efficient’s come from the untrained. And people who don’t want to be trained because they’re too lazy or too cool.
Barry,
I know I’ve been guilty of some of the same flawed thought processes, but I believe over the last decade or so that I’ve begun to really be more objective and not let politics get in the way. I subscribe to the “theory” that we humans are pack animals, very tribal, and our brains remain very focused on who is “us” (our tribe) and who is “them” (the others). And I think our brains work very hard to identify just who is who, and then, unfortunately, ascribe all manner of terrible traits to “them”.
So many people can’t see the vast improvements in the economy, not necessarily because they haven’t personally benefited, but because improvements can’t be happening under that political party’s (or President’s) leadership. I guess I’m agreeing with both Paul and DeDude…
The only way I can explain this to myself is pretty simple. Racism. A major portion of our population is not very happy at all that we have had a black president with a Muslim name for two terms, and that has colored their world view for years, now. How else do you explain Trump and his horrible, almost genocidal talk about our immigrants. I mean, he actually invoked Operation Wetback during the last debate (yes, I was also shocked at the name of a program that our INS instituted in the 50s) and proposed repeating such an operation, without barely a peep of outrage from the public and media. Hell, he was applauded! Now, after Paris, watch the clown car participants in the Rep. Campaign marry up our immigration issues with, yes, national security. Win win. Like that guy who landscapes down the street and lives five to a room is plotting to shoot up a Manhattan Friday night.
I guess we all have to remind ourselves that, even though the returning soldiers from WW2 and the Boomer kids were offered basically free post high school educations, a huge stroke of luck for millions, compared to today, that only about 30% of Boomers have a post secondary degree. We ain’t as smart as some may think. Yes, and pretty darn ignorant.
a lot of is politics, one side has to keep pointing to it being really bad,. and convinces a lot that it is. and the inequality in incomes, and that wages have grown much since the 70s, will tend to make one very cynical. and there are some major changes in the last 30 years in the economy. there is that lack of unions, and the constant focus on cost cutting (almost always an acronym for lay offs) that is constant. while those in the executive suite seem to be raking in the money while complaining about high labor costs. and that party that is pointing at how bad it is? is generally the party that created these changes. and they want go even further. odd how that part never seems to come up in the conversations
The economy is great in NYC, Washington DC, on the west coast and some other spots.
In the much of rest of the country wages are weak, there is a lot of part-time employment, the work force participation rate is low, lots of people are retiring at 62 because they have so few options (Robert M is correct) pensions are gone, etc. etc.
By the time some people get a little bit of recovery we are likely to be ready for the next recession. Some construction workers are just now getting back to decent hours (and the rustbelt contractors are bitching because so many of them moved south and west).
Not a good economy overall – ‘cept for rich white people.
lol, it is “great”, more than that.
Judging by Ben Carson, it’s pretty good for rich black people too, so why the snide reference to “white people”?
Really?? Ok, let’s just imagine a “Rust a Belt contractor”, say, living and working in the boom town of Denver, where they can’t build enough affordable housing for the thriving middle class. He sits in his pickup in December and brushes away work coming from all directions, because everything he does is gold and profitable. He probably has three or four rentals, if he’s half smart. Then his phone makes noise, and it’s his ski buddy telling him about the powder at ABasin, and then he gets a text about mountain biking in the hills from another bud, and then his golf buddy inquires if he wants to join a foursome on Saturday. Yeah, and he is even thinking of returning to a market where single family homes sell for below 50 grand. Please.
Let’s imagine! Dream the narrative.
Uhh… no. Look at the data. In a capitalist system bad things happen to good people. You are not owed success. you need to get lucky, work hard, and invest in your skills.
Our system adapts. People who refuse to change in it are domed, or vote GOP to protect their Medicare, SS, corporate welfare, in other words everything their lobbyists got for them.
Republicans told you all these things would happen that haven’t. So the current leaders of the GOP polls are the ones who convince The Base that The Predictions all came true in spite of reality.
Republicans are unglued because they made up so much bullshit they can’t swim out from under it.
The economic recovery has been mediocre at best. One need only look at today’s economic headlines to see that (Japan in yet another recession, Empire index strongly negative again).
I sure know one of thing that irks me to no end is the blatant manipulation of “markets”, such as today’s diagonal-up algo orchestrated manipulation fest (by my count diagonal up ramp #28398324823 since 2009 for those keeping score at home). I wonder which central bank it was this time.
Sorry to hear your recovery has not been so good.
AS BR made clear, it is lumpy and unevenly distributed.
Who said anything about “my recovery”?
The recovery is unevenly distributed, but that doesn’t mean that on the whole, it is mediocre at best. Which is what I stated above.
CN,
If they markets are manipulated than you should be able to game them, buy the “fixed thing” then hold until TheDonald comes in and makes America great again.
Please let us know which market prices are fixed so we can all benefit from your gut, too.
Thanks.
P.S. I see you under that tin foil….
I think you’re right about the racism thing . . . and it’s kind of subtle . . the black family in the White House makes too many people “uncomfortable”. It drives me nuts that the Republicans, the media and seemingly reasonable people can pretend that, yea, Carson could be the Republican nominee . . really?
Even the Democrats would NEVER go for a “2 fer” black president. Think about it.
As a defacto Democrat (technically independent) I would vote for another black president as long as I thought they would move the country in the right direction. Didn’t take a lot of thinking at all.
I don’t think the crappy attitude towards Obama is strictly because he is black. I think those are outlier cases. Certainly they exist. But, just look at Bill Clinton. Same attitudes. He was white if anyone didn’t know. FDR as Paul mentions was also white. Same attitudes.
I have said this before here. There is a culture of suffering in the United States. Stray from it and these people will come after you. Straying from it means try to implement a system that works for most people.
“Neither Clinton nor FDR was white. Neither is Kenya.”
– The Base.
So… what kind of comments pop up if you turn off moderation?
Barry, you began discussing the so-called “recovery”, then pivoted by stating, “…but combining politics with investing is a giant money loser” — in essence (intentionally or not) conflating the recovery and/or economy with the stock market.
I don’t disagree with the quoted statement, but as I’ve heard you state dozens of times, they’re not analogous. Thus, dropping that comment into the discussion strikes me as a bit of a red herring. Just saying.
What I think is more apt is that I find similarities between the early-to-mid 90’s when there was a mild recession (torpedoed GHWB’s 2nd term bid), but employment remained very tight for several years, especially after Clinton slashed the DOD budget.
Simultaneously, corporate earnings and equities increased at a much faster rate. Because employment was persistently below trend, I made the mistake of inferring that corporate revenues, P/E’s and equity prices should behave in a similar fashion. They most certainly did not. Lesson learned.
The rest of your article is pretty spot-on. Some folks are clearly seeing the economy from a biased position vis-a-vis individual political leanings and party propaganda, but the other factors you and commenters have illustrated (such as growing socioeconomic inequality (thanks to regressive Federal tax policies favoring the .1%), median wage stagnation and underemployment. Each are objectively observable and measurable absent tortured logic.
If we reverted back to the Clinton tax policy structure of 2000, we would likely see $50-100 billion of income redistributed to working and middle class families who would SPEND those dollars and grow the economy at a significantly higher rate.. This is in stark contrast to the .1% who are amassing huge fortunes and protecting them by hiring the best lawyers and lobbyists to protect their booty.
Also significant is age bias cropping up against middle-age management types, who in contrast to hungry college grads, want to work a 40 hour-week and take vacations with their families. The youth cohort are looking for any way to move out of the “sharing economy” and into the “gainfully-employed and earning wages economy”, including lower relative salaries and a willingness to work 50-60 hour weeks to prove their worthiness.
Then there’s the BLS’s application of hedonics, but that’s another post for another day.