The latest horror stories on the US economy

From Drudge, just a few side comments on the American economy, not featured but just listed. All so very ho hum because really, who doesn’t know any of this:

Fed Official Warns ‘Disappointing’ Growth Could Foretell Future…

Sluggish jobs market points to structural problems…

Yellen Determined To Avoid ‘Nightmare Scenario’…

Record income gap fuels housing weakness…

Wages Down 23% Since 2008…

Bank Profits Near Record Levels…

Let’s start with the first of these, Fed Official Warns ‘Disappointing’ Growth Could Foretell Future:

The official, Stanley Fischer, who took over as vice chairman of the Fed in June, noted that although the weak recovery might simply be fallout from the financial crisis and the recession, “it is also possible that the underperformance reflects a more structural, longer-term shift in the global economy.”

In a speech delivered on Monday in Stockholm at a conference organized by the Swedish Ministry of Finance, Mr. Fischer also conceded that economists and policy makers had been repeatedly disappointed as the expected level of growth failed to materialize.

“Year after year, we have had to explain from midyear on why the global growth rate has been lower than predicted as little as two quarters back,” he said. “This slowing is broad-based, with performance in emerging Asia, importantly China, stepping down sharply from the postcrisis surge, to rates significantly below the average pace in the decade before the crisis.”

Mr. Fischer said it was difficult to determine how much of the slackness was because of cyclical factors and how much represented a more fundamental, structural change in advanced economies.

In essence, they don’t have a clue what’s going on. Clear as crystal what the problem is if you don’t think along Keynesian lines and do not believe raising aggregate demand is the answer. In fact, all of it makes perfect sense if you go back to the pre-Keynesian (i.e. classical) theory of the cycle. But economists are now three generations into Y=C+I+G that thinking in any other way is a near impossibility.

But this is the one I find the most graphic, US Wages Down 23% since 2008. The American economy is falling into bits and real incomes are falling through the floor:

U.S. jobs pay an average 23% less today than they did before the 2008 recession, according to a new report released on Monday by the United States Conference of Mayors.

In total, the report found $93 billion in lost wages.

Jobs lost during the recession paid an average $61,637. As of 2014, jobs in the same sectors paid an average of $47,171 annually.

“Under a similar analysis conducted by the Conference of Mayors during the 2001-2002 recession, the wage gap was only 12% compared to the current 23%–meaning the wage gap has nearly doubled from one recession to the next,” stated the Conference of Mayors in a statement.

The report also found that 73% of metro area households earn salaries of less than $35,000 a year.

And the only thing they have thought to do to assist business has been to lower interest rates to near zero which, if they understood anything at all, they would understand would only make matters worse.

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30 Responses to The latest horror stories on the US economy

  1. .

    You’d think they might have some impetus to reduce regulatory red tape under such circumstances.

  2. johanna

    Yup, that fits with the news I get from friends in the US.

    Most people are getting poorer and poorer. It is only the fact that they can buy cheap stuff from China, Korea, Taiwan etc that has masked this to some extent.

    But when it comes down to housing, energy, education, taxes – their bills are rising, and their wages are not. And yes, they could go and live (with their children) in Detroit, where costs are cheap and lives are cheaper.

  3. So, is the trashing of the US economy just willful ignorance or is it deliberate?

  4. Joe

    Ignorance is the plea of the guilty when caught committing treason.

  5. Rabz

    Shouldn’t this post have included a “Trigger Warning” for Lord Yobbo of Siam?

  6. Ivan Denisovich

    You’d think they might have some impetus to reduce regulatory red tape under such circumstances.

    Going the other way:

    Last weekend, I wrote about the US Department of Agriculture’s Bunny Team Six. USDA has sent hither swarms of Officers (as some guy once said) to check that children’s magicians have fully compliant emergency plans (in writing) in the event that their bunny is caught in a natural or man-made disaster. The Heritage Foundation has more on what the new regulation requires. In preparing the emergency plan for the rabbit, the magician and any other person in the chain of command, such as an assistant in spangled tights, must:

    Identify common emergencies most likely to occur,
    Outline specific tasks required to be carried out in response to each of the identified emergencies,
    Identify a chain of command and who (by name or by position title) will be responsible for fulfilling these tasks, and
    Address how response and recovery will be handled in terms of materials, resources, and training needs.

    RTWT.

    http://www.nationalreview.com/corner/352792/order-form-more-perfect-regulated-community-mark-steyn

  7. thefrollickingmole

    Ivan Denisovich
    Id love to be advising the next GOP candidate in the election debate.

    It would consist of nothing but stories like this with the promise “And I will sack the people who wrote this into law, and anyone tasked with enforcing it, possibly shutting down the whole department if the rot has spread too far

    Then after 10-15 of them Id say “and thats how you bring government spending under control”

    An Amish man who was targeted by federal officials for selling raw milk across state lines – and whose cause was championed by GOP presidential candidate Ron Paul – has shut down his dairy farm.

    Dan Allgyer closed his rural Pennsylvania business after a federal judge sided with the U.S. Food and Drug Administration and ruled that he violated federal law. U.S. District Judge Lawrence F. Stengel on Feb. 3 ordered Allgyer to stop selling unpasteurized milk across state lines, the U.S. Justice Department announced Wednesday.

    …..
    When an over-zealous regulator shows up at a farm dinner demanding that food be destroyed as hungry guests await, who do you call? Here’s Laura’s account written as a letter to her guests who had come to Quail Hollow Farm expecting a meal of foods harvested from local small family farms.

    Sack them all, close whole departments pushing this shit.

  8. H B Bear

    If the Republicans can’t win the next Presidency in 2016 they might as well fold up the tent and go home. Or start buying tinned food, guns and retreat to the woods. Eight years of Clinton or Fauxcahontas will finish off the US.

  9. mundi

    Australia will follow the same path. Those in government – from the MPs right throughput the public sector – don’t know what recession or wealth creation or investment is. They get paid the same amount regardless.

    It is simply regulation that has caused this mess, and they have all tried to fix it with more regulation.

    Are we seeing the tipping point of the golden age of the west? We seem to be headed to long term decrease in the amount of wealth generated per capita.

  10. Ivan Denisovich

    Id love to be advising the next GOP candidate in the election debate.

    I like it.

  11. Bruce of Newcastle

    Perhaps this is why, two articles I randomly spotted from today:

    The Big Chill

    Obama strangles the U.S. economy in fresh red tape to fight imaginary “global warming.”

    Or this:

    Attrition Puts Dent in Obamacare Sign-Up Numbers

    Investors Business Daily reports that big companies like Aetna are seeing significant customer attrition as the newly insured can’t keep up with paying their premiums

    That’s just the independents fleeing. The employers can’t since they have to offer health insurance or they get fined hugely. That health insurance covers the cost of childbearing, abortions and the Pill for unmarried men, plus loads of other stupid progressive stuff. Then there’re all the other bureaucratic things they ladle on top. No wonder the SME’s in the US aren’t employing people or making profits. No one has money because the government is screwing anyone who has any and making everyone else pay for stuff they don’t need.

    What a toilet.

  12. Lindsay

    http://www.bls.gov/news.release/jolts.htm
    Hello Steve,
    Am I reading the wrong information. My understanding from the above article is that job openings in the US in June, are at their highest level since 2001. Thisarticle suggests a firming up their Labour market and that faster wage growth is now expected in the 2nd half of this year.
    I am sure you will put me right.

  13. Ant

    So, is the trashing of the US economy just willful ignorance or is it deliberate?

    I believe it’s the latter.

    Obama’s pledge was to “fundamentally transform” America. He’s turning its economy and society into a house of cards, and what’s the best way to transform a house of cards?

    Alinski would be proud.

  14. Ant

    The Affordable Care Act (cough!) introduced thousands of pages of new regulations – much of them directed at private sector companies.

    Yes, thousands!

  15. Tim Neilson

    Lindsay
    #1415430, posted on August 13, 2014 at 1:18 pm
    My understanding is that the number of full time jobs has fallen drastically since Obamacare was introduced, and the employment figures don’t look catastrophic only if part time jobs are counted as being the same as full time jobs.
    The government release you linked to doesn’t specifically deal with that.
    Also, as I understand it, growth in jobs overall hasn’t kept pace with growth in population.

  16. Demosthenes

    My understanding is that the number of full time jobs has fallen drastically since Obamacare was introduced

    Obamacare is being introduced slowly, and some parts haven’t been implemented yet, so there’s no single changeover point. If it’s having a negative effect, it will show up in the angle of the slope rather than snapshot numbers (ie depressing job creation on an ongoing basis relative to the counterfactual) Anyway, here’s a graph of full-time vs part-time.

  17. Tim Neilson

    Thanks Demosthenes.
    Contrary to what I thought the big crash in full time jobs does seem to have been before the actual commencement of Obamacare (though the lower axis looks a bit odd, with “2014″ right at the end even though they say July 2014 figures are included).
    Given that the graph relates to “numbers’ rather than percentage of the workforce and has a very truncated vertical axis, it’s a little difficult to guess whether things are merely anaemic or dreadful.

  18. Marion of the Glades

    I have been wondering whether the worries about fiscal over-reach might disguise more fundamental market factors. OECD economies benefited from the “WalMart” effect with imported labour productivity – mainly from China, but increasingly from other places such as India and Indonesia, but now China and others are moving up the value chain the hollowing out is hitting median and higher income demographics across the wealthier world and especially in the US where mid-tier incomes appear most at risk.
    The US especially appears relatively less competitive – aside from the cheap energy sector, which has a fillip (from the refusal of Obama to export gas).
    Here in Australia we have our own overhang from the good times in asset prices (houses especially) and household debt, both of which are overhanging consumption as job security shrinks.

  19. AH

    So where should smart people move to in order to escape the governmental overreach?

    Is there anywhere nice in South America or eastern Europe?

  20. Demosthenes

    it’s a little difficult to guess whether things are merely anaemic or dreadful.

    Comparatively speaking, very bad.

  21. Tel

    Sluggish jobs market points to structural problems…

    OMG make that man an economist!!!

  22. Tel

    Sack them all, close whole departments pushing this shit.

    An excellent first step.

  23. Tel

    Eight years of Clinton or Fauxcahontas will finish off the US.

    Have to destroy it; in order to save it.

    Don’t blame your leaders, blame duh Turrurst.

  24. 2dogs

    So where should smart people move to in order to escape the governmental overreach?

    Liechtenstein is looking pretty good, provided it doesn’t get sucked into the general euro-mess.

  25. Marion of the Glades

    @2dogs: I’m afraid Lichtenstein is a shocker. Aside from the fact that it’s no bigger than Pascoe Vale, the country has a rather odd cultural resistance to foreigners (other than tax lawyers and their clients). Nice royal family (the Queen is a charming woman – South American I think).
    My suggestion is Burma. It is likely to b e a very large version of Singapore, but richer. (As long as ASSK does not get her way.)

  26. AP

    So where should smart people move to in order to escape the governmental overreach?

    I’d learn an asian language. I dunno how China became communist and stayed so for so long. Chinese are natural entrepreneurs. Asians just ignore the stupid laws.

  27. AP

    NB: I don’t necessarily mean China itself. My pick will be HK, Taiwan or similar.

  28. stackja

    Liberty Quotes
    “We are going to tax and tax, spend and spend, elect and elect.
    — Harry Hopkins, advisor to Franklin D. Roosevelt”

    Liberty Quotes
    “No folly is more costly than the folly of intolerant idealism.
    — Winston Churchill”

  29. Cool Head

    There is no doubt that the US economy is being badly managed, but there is also a strong external driver of this change in incomes that the US has no control over.
    Basically, Mao Zedong was the greatest American hero of the last century. By keeping China communist and poor this enabled US unskilled labor to obtain a premium as they had little/no competition. Once China started to head down a capitalist path the jobs and wages for the unskilled here started to leave and fall respectively.
    One large part of what’s happening here is the effect of competition on unskilled jobs that cover a large part of the population.
    Unskilled workers of the previous generation should build statues in the middle of their towns and cities to Mao.

  30. JohnA

    In total, the report found $93 billion in lost wages.

    So, when are they going to give them back, eh?? :-)

    O/T but only partly…

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