How're we doing? (Sept 2012 edition)

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Unemployment: Yesterday's jobs report (Sep 7th) was reported as negative, after last month's positive. The monthly fluctuations have become standard since 2010 (see graph). Basically, the growth in jobs has been flat -- around 125K jobs per month since 2010.

It takes about 150K jobs just to keep up with population growth, but people have been dropping out of the job-market. Consequently, the official unemployment rate has dropped slightly, and ever more slowly.


GDP: Huge amounts of "fiscal stimulus" have brought GDP back over its pre-recession level. The piper will have to be paid some day... but not yet.

However, if one subtracts "transfer payments" from GDP, or if we look at industrial production, or the total number of people employed, we are still about 97% of the pre-recession levels. (See this August 5th post from the excellent Calculated Risk blog for details.)


Retail Sales: Though retail sales rebounded from its recessionary lows, they have flattened in 2012.

Stock market boom: Amidst this flat and stagnant real economy, we're seeing a stock market boom. We probably have Ben Bernanke to thank. By lowering interest rates (the exact opposite of what he ought to do) he has encouraged investors to take a chance on stocks.





Summary: After rebounding off the lows of the recession, the economy has not yet reached its pre-recession point. Using a "level concept" of recession (as opposed to the standard "change-concept") we're still in a recession. The bad news is that things have started to slow in the last year. Bill Gross of PIMCO talks of a "new normal", economist Tyler Cowen speaks of a "Great Stagnation". The immediate future seems to promise a slow crawl upward rather than any type of crash.



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