Not to be a harbinger of bad news, but I've felt for a while now that despite the U.S. having what seems to be a stronger economy, things are still unstable and not fully healthy in our country. Wages continue to stagnate, growth is slugish and labor force participation rate continues to sink. Here's a couple of articles about the situation:
http://www.profitconfidential.com/economy/u-s-economy-job-numbers-a-blunt-reality-check-for-america/
http://www.globalresearch.ca/eleven-signs-that-the-u-s-economy-is-rapidly-deteriorating-even-as-the-stock-market-soars/5524886
What do you think? Is the economy better than before the 2008 recession or do we have a long way to go?
It depends on how you look at it. If you just look at U3 unemployment we are back to where we use to be. However, there have been many changes across many industries. Perhaps what we are seeing today is the "new normal".
ReplyDeleteAs for the corporate earnings comment in the article, perhaps the Fed not raising interest rates fast enough is the reason why we are not in a recession. This could explain the mismatch between corporate earnings. We are due for a recession sometime soon based on historical precedent.
I think that in particular the lower labor force participation rate is the new normal, at least to some extent. That has been falling for awhile from a variety of demographic effects and culture changes. It may still have a little bit left to recover from the recession, but I think it's mostly back. At least as far as it's coming back.
ReplyDeleteI also think that a lot of what we have discussed on this blog can be explained by a theory that Mr. Piketty brings up in his book. How the race between education and technology determines wages to some extent. Technology has picked up the pace, and the education system just was not able to keep pace (for a variety of reasons). This can explain why we have a low paying "gig economy" for one segment of the population, while on the other hand we have a shortage of doctors. If we want to improve the economy in the long run, we need to invest in education to make sure it keeps up with technology.
DeleteI agree with Spencer's last point there. I think it has recovered about as much as it's going to. I also think Kenny brings up an interesting point about being due for another recession. I personally have felt the same way. It has taken us so long as a country to recuperate from the 2008 recession, and now I can't help but get a sense that another one is on the horizon in the next few years. Call it a hunch.
ReplyDeleteI don't think that as a country we can get back to the levels we were at before the recession. After something that large happens, the country needs to change and like everyone has been saying a new "normal" is formed. I don't think it is fair to compare what we are doing now to what was happening before the recession. We will not be back at that level, but right now we are not doing terrible. Whoever our next president will be will really help determine if the country will be in a recession or not.
ReplyDeleteI also agree with Spencer's point. I just read an article in the economist saying that it is a really. Bad time to be a middle class laborer. Because they are earning less and less from inflation and technology. Rachel also makes a great point that we cannot compare the recession to now.
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ReplyDeleteWe learn from our class how the Federal Reserve Bank absorbed weak collaterals in their another side of balance sheet. Those weak collaterals are not going anywhere. Since the U.S. economy absorbed unhealthy assets, the U.S. economy doing bad is corollary result of the Fed decision. With this rate of accumulating debt, there will be a huge down in near future.
ReplyDeleteThis goes to show that the stock market performance is not always indicative of the economy as a whole. I really like Spencer's point about the arms race between technology and education. The education system in this country has fallen behind. While the technology has continued to advance, there has been cuts to education.
ReplyDeleteI remember reading an article that because a lot more people are focusing on getting 4-yr bachelor's degree, not many people go to vocational schools. In the long run, decreased number of people who pursue studying in technical schools will result in decrease in manufacturing sector, which is still going on.
ReplyDeleteThe US is definitely out of the global financial crisis, but I think what matters is that the US is a highly developed country. For any developed countries in general, there isn't much room for the country to grow after achieving certain level of economy. Though the US could be fully recovered from the 2008 recession, the growth still could be stagnant. I think Spencer makes a good point that this is time for the US to invest in education. Once the government starts to invest, educational improvement and technological advancement will concur with the greater rate of return, which will wean the US economy from current stagnant growth.
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