Ask most Americans whether they buy the idea repeated daily by policy planners, investment managers and media talking heads that the U.S. is in the midst of a robust economic recovery, and they will simply roll their eyes in disbelief.
For most Americans, too many aspects of the economy are moving in the wrong direction for this to be called a "recovery." A recent Ford Foundation-funded poll found that 72 percent of Americans think the U.S. is still in a recession. According to a Rutgers University study, Americans generally believe they could not find another job if they were laid off and believe the next generation will not prosper as earlier generations have. Nearly three-quarters believe the economy has permanently changed for the worse.
Unfortunately, those with the power to reset the nation's economic course—the President, Congress and the Federal Reserve—don't share the public's fears, and until they do, they will not feel compelled to take the bold actions necessary to restore America’s prosperity.
Most definitions of "economic recovery" include the idea that hiring and purchases dramatically increase. Certainly on the jobs front this criteria has not been met. According to a government report, “workers in the U.S. business sector worked virtually the same number of hours in 2013 as they had in 1998—approximately 194 billion labor hours.” Since 1998, while total workforce hours have stagnated, the U.S. labor force has grown by 40 million people. No wonder fully one-third of Americans now work as temps and part-timers.
Four out of five of September's largest job additions were in lower-paying temp help, retail trade, food services and hospitality jobs. With inflation eroding the dollar's buying power, the average household income has shrunk to 1996 levels. Americans are 20 percent poorer than they were in 2007, says a Russell Sage Foundation study.
Over the last six years, most new jobs have been going to those 55 and older, while the 25 to 54 age cohort we count on to grow the economy and fund Social Security and Medicare has actually lost jobs. A new Federal Reserve study found that nearly half of recent college grads are either out of work or underemployed.
Americans are bewildered when the policy elites look at such numbers and proclaim "an improving jobs situation."
In 2014, new home sales promise to be as low as they were in 1963, when the nation's population was 130 million people smaller. Americans' 2014 car purchases—about 16 million vehicles, are no higher than in 1986. In fact, we are buying less of just about everything, including movie tickets, refrigerators, electricity and cooking appliances. A recent USA Today article revealed that the middle class can no longer afford vacations, medical and dental care and new vehicles. To stimulate a moribund auto and home market, Federal agencies are quietly encouraging banks to make risky home and auto loans to subprime borrowers, the very practice that sparked the 2008 financial crisis.
The stagnant economy’s social impact is palpable. We’re having fewer children—in 2013, the U.S. population grew at its slowest rate since the Great Depression. New household formation is declining, as marriage rates stagnate.
Why do our policy leaders continue to label a "recovery" what many Americans see as a quagmire? Look no further than the rising stock market, which politicians and media talking heads almost instinctively associate with a booming economy, even in the face of shrinking labor markets and wage stagnation. In their euphoria they ignore the fact that what's driving this bull market is not economic growth but the Fed’s zero interest rate policy (ZIRP), which compels profit-driven mutual fund and pension managers to invest their billions in the stock market, the “only game in town.” (Ironically, the inflation-adjusted S&P 500 index is about five percent below its 2000 high.)
Six years of ZIRP have cost American savers an estimated two to ten trillion dollars in potential interest payments they could have used to purchase millions of cars and homes and start thousands of businesses. ZIRP is making Americans poorer every day—your $100,000 sitting in the bank since 2009 has lost $40,000 in interest payments at the normal six percent rate.
Our policy leaders’ continued inaction guarantees a shrinking middle class and the loss of America’s global leadership position. The time to act is now!
Start by cutting taxes on individuals to unleash their purchasing and investing power. Stop driving jobs and companies offshore with exorbitant tax rates. Boost the nation’s energy production base, as we are doing with new natural gas projects in Texas and the Dakotas. End regulations that punish manufacturers, energy producers and start-ups, like EPA rules threatening the existence of the U.S. coal industry and its tens of thousands of jobs. Stop penalizing savers with absurdly low interest rates.
Politicians and the media should declare a two-year moratorium on the use of feel-good terms like “economic recovery” until the economy reaches well-defined benchmarks: GDP growth of 5% to 7% annually for two years, the creation of 500,000 or more new full-time private sector jobs per month, an increase in wages per hour and the workforce's total number of hours worked, and new home purchases of a million-plus per year.
Americans despair as their leaders do little to address the issue, which polls reveal is the citizens' number-one concern, the moribund economy, and instead obsess over matters Americans rank lowest in these surveys, such as domestic violence among football players, funding for contraception on campus and same-sex marriage.
Americans hope for a political leader or party that makes fixing the economy their number one priority and offers a clear and bold vision for restoring the American dream.
Interested in applying for the job? The field’s wide open.
Michael G. Zey, Ph.D, is a Sociologist/Futurist whose books include Seizing the Future, Ageless Nation, and the forthcoming The American Future. He is a Professor, School of Business, Montclair State University, NJ. His website is www.zey.com.