The economy is growing a lot faster than we thought.
New numbers out Friday show the gross domestic product expanded 4.1 percent last quarter. That’s certainly good news, but it’s cold comfort for the millions Americans who are out of work, as well as those workers who can't squeeze a pay rise out of their employer. Politicians, including President Obama, are treating today’s GDP numbers like some kind of happy ending in a movie like “Miracle on 34th Street.” But the reality is more like something outside Hollywood’s Christmas canon: “Die Hard.” (Yes, "Die Hard" narrowly qualifies as a Christmas movie.)
In it, good guy cop Bruce Willis opposed Alan Rickman, who donned a ridiculous accent as leader of a vaguely European terrorist group that invades a skyscraper while drunken execs celebrate the holidays. They were oblivious to the armed villains outside until it was too late. In turn, folks doing victory laps about today’s GDP numbers are also ignoring some scary stuff.
“The economy as it’s experienced by people has not improved nearly as much as some of these GDP statistics suggest,” says American Enterprise Institute labor economist Michael Strain.
There are a number of evil forces lurking about that explain why strong top-line numbers haven’t translated into a better life for regular Americans.
“We still have a significant portion that is long-term unemployed,” says Linda Barrington, executive director of Linda Barrington is executive director of the Institute for Compensation Studies at Cornell University’s Industrial and Labor Relations School. “The biggest challenge we’re gonna be facing is how do we bring those who really were pushed out of the market for a long time back in as we recover.”
And that’s not the only evildoer menacing the party. The overall unemployment rate may be dropping, but in part, that’s because people are giving up. They aren’t factored into it.
“There’s a large number of people who have been discouraged and are not even actively searching for jobs,” says Enrico Moretti, economist at University of California, Berkeley.
With widespread job market problems terrorizing the economy, it’ll take more than one sunny GDP report to save the day.