Recovery-lite

By Ben Walsh
March 26, 2014

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The Great Recession ended in June 2009. The average post-war recovery, Jared Bernstein notes, lasts just 58 months before there’s another recession — and this recovery is now 57 months old. But even as the recovery enters its statistical autumn, most Americans haven’t noticed that it ever happened at all. A recent NBC/WSJ poll found 57% of respondents thought the US economy was still in a recession.

Josh Barro points to barely-there wage growth to explain the disconnect. Between 2009 and 2012, real incomes of the 99% grew at a meager 0.1% annually. The longer term trend, he points out, is clear:

Wages and salaries peaked at more than 51% of the economy in the late 1960s; they fell to 45% by the start of the last recession in 2007 and have since fallen to 42%. When the economy does grow, that growth disproportionately accrues to the owners of capital instead of to wage earners; and in the last few years, weak growth and abundant labor have made that pattern even stronger than normal.

The recovery motors on, with steady GDP growth and a turbo-charged stock market, but it’s not just wage growth that has been absent. The last two recoveries, Atif Mian and Amir Sufi say, have been relatively jobless. Analyzing a chart from the Dallas Fed, Mian and Sufi conclude that “in 2001 and in the Great Recession… output recovers, but jobs don’t”. The economy has added jobs in the last five years. But as Neil Irwinobserves, “the jobs recovery in the US is astonishingly consistent, astonishingly resilient, and astonishingly underwhelming”.

Cardiff Garcia finds a way to take some cheer from the lackluster recovery. Looking at Bernstein’s comment that the US recovery is “getting longish in the tooth”, Garcia notes the sample set for that 58 month average includes all post-war recoveries. While it’s by no means deterministic, the length of the average economic expansion during the post-80’s Great Moderation is eight years, a full three years longer than the overall post-war average. Surveying the quality of the recovery, Garcia quotes a Goldman Sachs research note which says that while recoveries from housing busts tend to be slow, “slow recoveries also tend to be long-lived, with economic constraints loose, policy accommodative and equity markets robust”. – Ben Walsh

On to today’s links:

Charts
America’s class system across, from birth to death - Demos

Yikes
The regulator monitoring 248 million cars has 51 employees and a $10 million budget -Bloomberg

Deals
Facebook is a “holding company for various properties in world domination” - Joseph Cotterill

Labor
Northwestern football players clear the first hurdle in their attempt to unionize - SB Nation
Northwestern is appealing the decision, natch - ESPN

Good Luck With That
UK banks are hiring a bearded “corporate philosopher” specializing in bright shirts, mixed metaphors - WSJ

Servicey
A roundup of the worthwhile reviews of Picketty’s “Capital in the Twenty-First Century” - Brad DeLong

Wow
The work that goes into great graphics - Bizweek Graphics

Equals
The Glass Cliff: Are women more likely to be appointed executives in a crisis? - Bryce Covert
How Harvey Mudd took its CS major from just 10% female to 40% - Quartz

IPOs
“A better comparable would probably be the bowling stock bubble of 1961″ - David Gaffen

Sad
“New York is no longer a bookstore city” - NYT

Oxpeckers
The problem with FiveThirtyEight is “data the buzzword vs data the actual thing” - Noah Smith

Bitcoin
IRS declares bitcoin property, not currency - WSJ
“Bitcoins are not fungible, and that makes it unworkable as a currency” - Credit Slips

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