I have noticed something unsettling in my own life lately: I know a lot of people who are on food stamps or some kind of extraordinary government assistance. The count right now stands around 10 people, which is a lot for a small town denizen such as myself.
That is a personal reminder of a very serious, yet rarely discussed economic, social, and indeed political problem: the fact that better than one out of seven Americans today requires government help to put food on the table.
The following graph is only for the hale and hearty:
The start date of this heartbreaking graph is important – June, 2009 is the point at which, according to the National Bureau of Economic Research (NBER), the economy hit bottom and began to recover.
What we see in this graph is one example of a persistent feature of the recovery to date. On the top-line of the economic data, it often appears as though we have filled in the hole that was dug by the Great Recession. Check out this graph of personal income per capita to appreciate that. However, it is largely an illusion, a product of deficit-financed government spending – in the form of things like food stamps, extraordinary unemployment benefits, and the relatively stable federal employment situation.
Call it the American "food stamp recovery:" take away the government supports, and the economic picture looks very bleak indeed. Two sobering features stand out.
First, the ability of the private sector to provide people with a stable standard of living is in a long-term decline, one that has only eased, not reversed, in recent months. The following graph captures this phenomenon by tracking real wages per capita derived from the private sector.
What we see here is that the private sector wages and salaries are actually at a thirteen-year low point when measured on a per capita basis, and the most recent reading (from Quarter I of 2011) showed a continued decline. The only “good” news is that the slope of the descent has eased.
Second, the empty spot in the national wallet generated by the breakdown of private wealth has been filled by a socialization of personal income directed by the government. The following graph tracks the share of personal income that comes from either government transfer payments or government salaries.
Yikes.
All of this leads to the next point. This has been the worst economic recovery in generations, at least as it is felt by the average American. Let’s be precise in our language here: we’re not talking about the recession itself; we’re talking about the recovery, which has entirely been on Barack Obama’s watch.
This is not rhetorical bluster, but empirical fact. The following graph demonstrates that by comparing employment in this recovery against every recovery since 1960. What I did was take the percentage of the adult population that was employed when NBER says a recovery began, set that as a baseline (100 percent) and tracked how this recovery stacks up against previous ones.
As we can see, this one is worse than any other in 50 years.
Unsurprisingly, we also see weakness in terms of real per capita income, as the next graph demonstrates. I did something similar with this one – taking real income per capita (minus government transfer payments) at the point that NBER says a recovery began, setting that at 100 percent, and tracking how the current recovery stacks up against previous ones.
Taking the last two graphs together, the ultimate point is validated: this is the worst recovery in generations. The 2001 recovery saw similar weakness in terms of real income, but jobs bounced back better that time. What's more, the 2001 recession was substantially milder, so we should have expected a greater snap-back this time around.
On a cause-and-effect level, it’s hard to assign much blame to this president, or any president for that matter. As we can see from the last two graphs, the recoveries from the 1990, 2001, and 2007 recessions were all slow and unimpressive, suggesting that there are greater forces at play than the current occupant of 1600 Pennsylvania Avenue. Indeed, the transition to a post-industrial economy might be the single biggest factor. The once-great anchors of the American economy – steel, automotive, rubber, and other industries – used to be able to lay workers off temporarily during a slowdown, then bring them back when demand picked up, as can be seen in this graph. But the industrial sector of the economy is today just a fraction of what it used to be, meaning that such a brisk rebound is no longer possible.
Obama does deserve some of the cause-and-effect blame for this recovery, mostly due to the terribly inefficient stimulus. I was recently in Washington and was able to snap this photograph, which should go down in the annals of history as a testament to Keynesianism run amok.
It goes without saying that there were better ways to generate a recovery than this, so Obama and congressional Democrats deserve some cause-and-effect blame for the pace of the rebound. (Side note: Two years after Congress appropriated the money for this project, it is still not completed.)
On a political level, the blame for the recovery goes entirely to President Obama. Indeed, looking at the polls on his handling of the economy, you can see that he is already taking the heat.
And so, we can lay down the following marker: if the economic recovery does not begin to show substantial improvement, the likes of which we have not really seen in the last two years, and if the GOP nominates a reasonably acceptable alternative, this president is going to lose in 2012, and the final result will not be close. Nobody gets reelected with employment way down, real income way down, and 14 percent of his fellow citizens on food stamps. Nobody.
And the president needs something more than a “recovery” in the sense that we’ve seen to date. When you start controlling for inflation, population growth, and government intervention, the recovery we’ve seen has only been, at best, a treading of water for average people. This president needs to see a significant improvement in real, per capita, and private metrics of personal economic vitality. Put simply, he needs something more than this "food stamp recovery" to win next year.
People who are giving such a heavy advantage to the president next year must be making at least one of two assumptions: (a) the economy is suddenly going to do better than it has done in the last two years; (b) the GOP nominates a dud.
On the Republican nomination front, Democrats and their friends in the mainstream media shouldn't count on that, for the reasons I elaborated here. And when it comes to the economic growth front, no more peeing on my leg while telling me it's raining: After two years of this disappointing, anemic, worst-in-several-generations, quote unquote recovery, I just don’t believe that the big, long-promised rebound is coming any time soon.
Instead, what I believe nowadays is that this president is in a huge amount of trouble, as we all are.
(For the rest of the charts): http://www.weeklystandard.com/blogs/morning-jay-economy-still-not-good-enough-reelect-obama_559238.html?nopager=1
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