'Ominous signs' loom over reports of a supposedly strong economy — and workers are still struggling
President Donald Trump hasn’t been shy about citing economic data, pointing out how much unemployment has decreased in the U.S. and insisting that he is responsible — never mind the fact that unemployment was already down to 4.7% in December 2016, President Barack Obama’s last full month in office. Trump inherited an economic recovery; he didn’t create one singlehandedly.
But while the 3.7% unemployment rate the Bureau of Labor Statistics (BLS) gave for June is certainly an improvement over the financial misery and devastation that Obama coped with in 2009 and 2010 during the worst of the Great Recession, there are some troubling signs in current economic data — and those signs are examined in articles published by the Washington Post, the New York Times and Bloomberg News this week.
Sen. Elizabeth Warren and Sen. Bernie Sanders have both been complaining that most of the economic gains of the Trump era have gone to Americans at the top — and Heather Long, in the Washington Post, notes that 40% of Americans still say they are struggling to pay their bills. Long notes that although the “stock market is at record levels” and the current “economic expansion” is the longest in U.S. history, this is a “two-tier recovery.”
And the lower tier, according to Long, is seeing “paltry or volatile wage growth, rising expenses for housing, health care and education, and increased levels of personal debt.”
Long observes that according to Matthew Mish (head of credit strategy for the investment bank UBS) the 40% of Americans Mish considers the “lower tier” is struggling to make ends meet.
Neil Irwin, in the New York Times, cites some good news: “Employers added a robust 224,000 jobs, the Labor Department said, up from a revised 72,000 in May.” But Irwin goes on to cite some bad news as well — for example, Irwin writes, “average hourly earnings have risen only 3.1% over the last year.”
Irwin reports, “Even as low as the unemployment rate is, employers don’t seem to be bidding up the wages to get workers.” The Times reporter stresses that although “the American job market is steady and solid,” wages aren’t increasing enough for “the average American worker.”
He also noted the financial markets are sending "ominous signs about the global economy."
The Great Recession was the worst economic downturn since the Great Depression of the 1930s. When Obama was sworn in as president in January 2009, he inherited the worst economy of any president since Democrat Franklin Delano Roosevelt (who took office in 1933 after his landslide victory over Republican incumbent President Herbert Hoover in 1932).
The Great Recession left millions of Americans financially scarred. And Karl W. Smith (a former economics professor at the University of North Carolina) explains in Bloomberg News that although “the job market is still going strong,” the U.S. economy still isn’t “fully healed” in 2019.
“For most workers,” Smith warns, “wages are rising only modestly. That implies there has been an ample supply of people outside the job market who can be pulled back in not because they are being offered more money, but because now, employers are giving them the opportunity.”
In other words, those workers are being underpaid, but being underpaid is a step up from all the extended unemployment of the Great Recession.
“The job market is still going strong,” Smith reports. “But until we see labor’s share of income rising and increasing numbers of people choosing work over school and retirement, the job market won’t be fully healed.”