Thursday, June 06, 2013

Yet Again, Obamanomics' Remarkable Feat - Good for Owners, Bad for Workers

In two days, two powerhouse west coast economists have come out with some less than encouraging findings.  Yesterday, Ed Leamer came out with UCLA's Anderson Forecast and this summarizing tidbit was picked up on the newswires and blogosphere.
"It's not a recovery," he wrote. "It's not even normal growth. It's bad."
Today, Stanford's Ed Lazear hits the pages of the WSJ Op-ed section to tell us that a troubling break in a long-standing pattern is not good.
During the past three decades the relation between unemployment and employment has been almost perfectly inverse. (See the nearby chart.) When the employment-to-population ratio rises, the unemployment rate falls. When the unemployment rate rises, the employment-to-population ratio falls. Even the turning points are aligned. Consequently, the unemployment rate has been a very good proxy for the employment rate. But that relationship has completely broken down during the most recent recession.
The U.S. is not getting back many of the jobs that were lost during the recession. At the present slow pace of job growth, it will require more than a decade to get back to full employment defined by pre-recession standards.
Yet, as I write this, this piece of economic data is flashing across my screen:
Household net worth grew by about $3 trillion to a seasonally adjusted $70.3 trillion, helped by $1.5 trillion in gains from stocks and mutual funds and another $784 billion from rising house prices.
No new comment is needed, I have explained this all before in great detail - despite all the rhetoric and posturing, under Obamanomics being an owner of capital assets is your only refuge and not all that bad, but being a worker is extremely difficult.  This is the economy that Democratic economic policy has inevitably created.  It was thoroughly predictable because I predicted it.


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