Trouble still brews, but economy strong
Chicago (Dec 28) With the ground beneath us shaky for so long, American have been loath to acknowledge what now seems undeniably true:
The economy is in far better shape than it has been in ages, although we continue to suffer growing income inequality and wage stagnation.
The economic signs are pointing up, and hopefully for more of us than not.
Economists say the Great Recession officially ended more than five years ago but for many Americans that’s a cruel joke. The recovery has been slow and for many, not at all.
But a slew of recent economic data shows we’re on the rebound. A few nuggets to chew over:
* The economy grew in the third quarter at the fastest pace in 11 years, according to a U.S. Commerce Department estimate released last week. This was fueled by strong spending by consumers and businesses.
* The Dow Jones industrial average last week topped 18,000 for the first time. And that’s not just a boon for the affluent. The typical 401k profile shows that the bounty extends far below the 1 percent.
* The national unemployment rate has been dropping since 2010, hitting a new low of 5.8 percent in October and November, though it must be pointed out that this fails to account for people who have given up looking for work. The Illinois rate follows the same trend, settling at 6.4 percent in November, a six-year low. For the fifth time in the past six months, the rate dropped in each of Illinois’ 12 metro areas.
* In Chicago, city permits for new construction are up nearly 46 percent compared to two years ago, the Sun-Times reported Thursday.
Despite this good news, many Americans don’t embrace an optimistic view.
Some of that is misguided, or political. Heaven forbid any Democrat — namely President Barack Obama or outgoing Illinois Gov. Pat Quinn — gets a smidge of credit for helping to improve the economy.
But some of the pessimism is entirely justified.
Consider just a few realities that affect everyday people:
* In 2013, the median household income of $52,000 was 8 percent lower than in 2007, the year before the recession began, U.S. Census Bureau data shows. Incomes haven’t even recovered to pre-2001-recession levels, especially for blacks, who are down nearly 14 percent. In addition, the Great Recession exacerbated the wealth gap between whites and blacks, with median net worth for whites now 13 times that for African-Americans, according to a new Pew Research Center study.
* Income inequality is ever growing. Earners at the bottom 10th percentile of the income spectrum saw incomes decline by 14 percent between 1999 and 2013, while folks at the 50th percentile saw their incomes drop by 9 percent. The earners at the 90th percentile did not decline, U.S. Census bureau shows.
* Some 45.3 million people in 2013 lived in poverty, or 14.5 percent of the population. While that is down slightly from 2012, it’s still two points higher than in 2007.
When 2014 data is crunched it likely will paint a slightly better picture, though still a grim one for many earners.
But the larger macro trends are positive, highly encouraging even.
For that bit of solid and sturdy good news, it’s worth taking a moment to reflect.
The worst may indeed be behind us.