More on the State of the Economy
The cheerleading about the state of the US economy continues unabated from some, particularly those who advocate extending the Bush tax cuts. See, for example, this typical piece by Victor Canto), and some of the sentiments bandied about during the Pajamas Media Blogjam (James Hamilton excluded) that PGL has already commented on.
Frankly, I’m tired of all of this nonsense about the economy doing better now than it has since the golden days of the Reagan administration. Recent economic performance is reasonably good by some measures, but nothing unusual for an economic expansion. If anything, this economic expansion has been somewhat disappointing, compared to historical periods of economic expansion.
I’ve assembled the following graphs to (hopefully) lay this issue to rest. First, GDP growth:
The best 2-year GDP growth of this expansion (of about 4% p.a.) is only average, or slightly below average, compared to what we would expect in an economic expansion.
Prefer a different measure of economic performance? Then how about industrial production:
Hmmm… recent economic performance doesn’t look any better there, and may even be a bit worse than previous economic expansions.
Well, at least income has been growing, right? After all, the White House’s own press release about the fantastic economy brags that “real disposable income is up“. Let’s look at the picture:
Well, it’s true that income is higher than it used to be… but it’s also true that income growth has been slowing over the past few years. Income actually grew faster between 2001-03 than it has over the past two years (not to mention earlier, when income growth was faster still).
Finally, there’s the story we’re all familiar with, which is the downright lousy performance of the labor market:
Look, I don’t think the economy is doing terribly. It’s been doing moderately well, in fact. But compared to what we would expect in a mature economic expansion, the US’s economic performance is only fair to middling, and the economic growth that we’ve had has been very uneven, largely side-stepping the middle class. Certainly, this economy seems to be nothing to brag about. Nor does it constitute grounds to conclude that the tax cuts of 2001 and 2003 have ushered in the economic golden years.