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How firm is our economic recovery?
An exit sign for economic recovery
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Kai Ryssdal: I think it's fair to say the national economic mood has brightened somewhat in the past few months. The labor market is on the mend. There's real growth in gross domestic product. Yes, I know the Dow Jones Industrial Average is not the economy. But still, 11,000 is a promising number. And then, we go and get days like today.
Marketplace's John Dimsdale reports now from Washington.
JOHN DIMSDALE: The number of workers applying for unemployment benefits surged to nearly half-a-million last week. That's the biggest increase in two months. Home foreclosures jumped a record 19 percent in March. And industrial production for the same month was up slightly, but disappointed economists.
JACK ALBERTINE: The reality is that this is a wimpy recovery.
Forecaster Jack Albertine says today's numbers reinforce his view that unemployment will stay above 5 percent for three or four years.
ALBERTINE: I don't think we're poised for a strong rebound. I think we're in a rut basically, a very slow recovery.
But forecaster Macroeconomic Advisers is sticking with its prediction of a healthy 3.6-percent growth rate for the overall economy this year. Even with today's numbers, says Ben Herzon.
BEN HERZON: Those particular data I would discount as statistical noise in an otherwise improving trend.
He says the stock market's rise, along with more stable home prices, is giving consumers the confidence to spend more. Retailers report healthy gains, although several lenders today said credit card defaults were on the increase.
Wharton School professor Jeremy Siegel says there's still a dangerous undertow, but the economy will be able to swim out of it.
JEREMY SIEGEL: Not everything is going straight up, and we know the labor market has been extremely soft. And it'll take a while before that becomes a self-sustaining recovery.
And Siegel says a global recovery is underway that will help pull America up.
In Washington, I'm John Dimsdale for Marketplace.
Well, how do we define a recovered market? Is it a market that looks like the record levels we had a few years back, when a bubble allowed people to own more house than they needed, an expensive SUV for both parents, etc?
If we lost our expensive toys and got a lifestyle "in line" with our abilities, would that define a recovered economy? If so, how many people who were raised from childhood to compete with the Joneses, can define what living within their job potential's paycheck really means? I think most people wouldn't consider any economy that doesn't put them right back to where they were--living off of cheap credit rather than a solid paycheck, living within their means, not impressing the neighbors or buying more than one phone or computer or TV just to have the latest toy--to be a recovery.
It would be great if John Dimsdale would ask his guests, especially those with the bright outlook, to define what they mean by the economy. To me it is my job, my wages, my savings, my costs, ... To them it is some esoteric GDP calculation and Wall Street that really has little effect on most people's lives. The employment trend they use to bolster the improving economy scenario equates to hitting bottom and the only trend is up.
Kai Ryssdal: I think it's fair to say the national economic mood has brightened somewhat in the past few months.
Oh really? Unemployment hasn't budged and inch. Ask those people if they are feeling happy. Silly me. I keep forgetting that this is a "jobless recovery" ... which is kind of like a taxless tax increase.
Given that the home and commercial real estate foreclosures (the thing that got us into this mess in the first place) continue to climb month after month, I am willing to be bet that all we have done is postpone the day of reckoning with TRILLIONS both borrowed and printed.
The entire macroeconomic situation is giving me an ulcer. I hear all this cheerleading......and of course the market keeps rising on low volume. I just can't make a case for an improving economy at this point. Why? 1. High unemployment 2. High underemployment 3. High rates of bankrupcy in spite of tightened regulations 4. Record forclosures 5. Bankrupt states 6. Bankrupt municipalities 7. Record Federal spending/debt 8. Pump prices for gas passing $3.00 9. Bank recapitalization at the expense of savers. (read record low interest rates) and finally...... 10. A stock market that just won't stop rising! (is this a bubble?) BFP
While I won't argue that the economy is any better than it seems, comparing current unemployment numbers with previous times isn't as straightforward as it looks. Congress keeps extending unemployment benefits, to make them last longer and longer, and that means that the people who would ordinarily stay on the unemployment rolls as long as they're allowed and then stop looking for work stay on longer, inflating the count.
