But there were weak spots in this morning’s report: After overall hourly wages rose noticeably in November, they dropped by almost the same amount in December. Hourly wages wages went up just 1.7 percent in 2014, before adjusting for inflation. That translates into a very small real increase in earnings per hour. Inflation’s been just below that number, and dropping energy prices have dragged it way down. As economist Bob Stein has noted in this space often, the BLS has found that people are steadily adding more hours, so their cash wages are rising pretty noticeably — but that’s only one element of a recovery. (The flipside to this, economist Justin Wolfers pointed out on Twitter, is that strong jobs growth — i.e., raising people’s incomes from zero to a salary — can do a lot more than a point or two of wage growth.)
Noticeably, the labor-force-participation rate dropped 0.2 percentage points in December (all these numbers are seasonally adjusted), which suggests that that number still hasn’t bottomed out. That is a constant battle, of course, because the population is aging so fast — but higher wages should draw many inactive Americans back into the labor force. That’s what a great recovery would look like.
All of this is good reason to be skeptical of the idea we’ve entered an “Obama boom.” The economy’s 5 percent growth rate in the third quarter and the strong record of jobs this year had a lot of people on the left suggesting that the economy had shifted into a new, higher gear. (See, for instance, Matt O’Brien’scase in Wonkblog.) There was data to support that case, but there have been other points during the recovery when it felt like it was about to happen, too. 2014 has been a significantly better year for the economy than 2013 was, that’s clear.
It wasn’t, however, a true boom, and we can’t say with real confidence it was good enough to guarantee a good 2015, too. There is at least one big fundamental shift that should help sustain growth in the U.S. — much lower oil prices — but now Europe is causing headaches again, China’s slowdown is still a peripheral concern, etc. Maybe we’re getting into a virtuous cycle, and booms . . . just happen, but 2014 wasn’t exactly 1999 or 1983. If just “noticeably better than the crappy recovery so far” is going to be the definition of the Obama boom, we need it to last a while.
Noticeably, the labor-force-participation rate dropped 0.2 percentage points in December (all these numbers are seasonally adjusted), which suggests that that number still hasn’t bottomed out. That is a constant battle, of course, because the population is aging so fast — but higher wages should draw many inactive Americans back into the labor force. That’s what a great recovery would look like.
All of this is good reason to be skeptical of the idea we’ve entered an “Obama boom.” The economy’s 5 percent growth rate in the third quarter and the strong record of jobs this year had a lot of people on the left suggesting that the economy had shifted into a new, higher gear. (See, for instance, Matt O’Brien’scase in Wonkblog.) There was data to support that case, but there have been other points during the recovery when it felt like it was about to happen, too. 2014 has been a significantly better year for the economy than 2013 was, that’s clear.
It wasn’t, however, a true boom, and we can’t say with real confidence it was good enough to guarantee a good 2015, too. There is at least one big fundamental shift that should help sustain growth in the U.S. — much lower oil prices — but now Europe is causing headaches again, China’s slowdown is still a peripheral concern, etc. Maybe we’re getting into a virtuous cycle, and booms . . . just happen, but 2014 wasn’t exactly 1999 or 1983. If just “noticeably better than the crappy recovery so far” is going to be the definition of the Obama boom, we need it to last a while.
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