One of the oft-cited accomplishments that Democrats and the Obama Administration like to put forward is that the US economy has been lifted out of near-collapse and is in a post-recession recovery.
This is certainly not the case as measured by most every indicator of economic health.
We are not creating enough jobs to satisfy the number of people entering the workforce, much less replacing the jobs lost during the 2008-2009 recession.
The Bureau of Labor Statistics would have us believe that the unemployment rate is reaching near full employment (considered to be around 4.5%) when viewed by the U3 rate, however, the BLS fails to account for the dramatic shrinkage in the labor force which has resulted in millions dropping out and seeking Government entitlements rather than a private sector paycheck. Another trick employed by the BLS to hide the true unemployment rate is “seasonal adjustments”. This particular manipulation is not easily understood or rationalized.
The broader measure of unemployment, which takes into account working age individuals who have stopped looking for work but who would, nonetheless, be in the workforce if a job were available is currently at 14.7%. That’s a far cry for the officially published U3 rate of 4.9% being hyped as a sign of our current economic recovery.
The reality for most US workers is grim. Black unemployment nationwide is double that of whites at 11.6% and for Latinos it is 7.5%. The situation for young Americans (age 16-19) is substantially worse (17% overall but nearly 30% for black youths).
Then there is the quality of the jobs being created. Data indicates that these new jobs are not the high-paying jobs that can support a family of four but are seasonal, service sector, or second jobs that pay near minimum wages and are not full-time jobs that offer a bounty of benefits like healthcare, 401K matches, paid time off, etc. A significant number of Americans who could work simply won’t because their Government benefits are too enticing. While the private sector struggles, Government employment has reached full staffing levels. There are currently more Government employees than manufacturing workers in the U.S.
Real wage growth has been meager and not the picture that the Obama administration has been painting. Real income is non-existent for the bottom 99% and household net worth is shrinking as debt rises.
One of the best methods to create individual wealth and to rise through the socioeconomic classes is the investment, and subsequent wealth accumulation offered by home ownership. The Government encourages this pathway out of poverty by offering mortgage interest deductions and low-cost loans to encourage minorities and others at the low end of the economic ladder to strive to achieve the “American dream”.
Unfortunately, that dream is being shattered.
The housing bubble that was caused by Government mandates to make risky loans to those who could not otherwise qualify by having sufficient income or assets caused the financial meltdown in 2008. Make no mistake, this was not a result of “predatory lending” practices but a direct result of the Government’s attempt to give the poor a shot a wealth creation from 2000 to 2003 with an increase of 400% in new mortgages and few controls in place to ensure that loans would be paid back or that sufficient down payments were made to pre-qualify applicants.
That pattern continues today as the Government tries to encourage the same practices by harping good economic news, using the Federal Reserve to keep interest rates low, and allowing high risk loans to be acquired by Fannie Mae and Freddie Mac that will result in taxpayers being on the hook for subprime loans (currently assumed to be 30% of the nearly $6 trillion in backed mortgages). These two Government entities own nearly 50% of all the mortgages issued in the U.S. and have yet to be fully audited and rank among the worst agencies for apparent lack of oversight.
Recent statistics show that home ownership in the U.S. is at an all-time low. While many proponents of the “healthy” economy mantra will try to explain that this is the result of rent vs own, it speaks to the fact that Millennials cannot afford a home on their meager salaries and high student loan debt, coupled with the high cost of health insurance and lower paying jobs that do not require a college degree.
What does it all mean?
Taken as a whole, we are being sold a false narrative about the economy. We are in the midst of a post-recession slump that has been largely caused by the economic policies of the current Administration. The Feds low interest cheap money has propelled the salaries and indexes for Wall Street but that money is not being lent to consumers and businesses for investment in startups, jobs and a myriad of other economic activity. The implementation of a record number of costly regulations has dampened the growth of business and has unintended consequences on the economy and the American public.
A paradigm shift is truly needed to turn this ship from the impending head-on collision with reality.