Axios has an annual Thanksgiving feature in which the publication looks at (verifiable) economic evidence for which we should be grateful. Given the mountains of misinformation and outright propaganda about the economy being promulgated for political purposes, it’s worth taking a look at what the numbers actually show.
First of all, the article says we should be grateful is that lots of Americans are working. Predictions that workers wouldn’t return to the labor force after the pandemic were simply wrong.
Workers have joined the job market in droves. The rebound in supply, lifted in part by an immigration surge, has helped the labor market come into better balance amid continued low unemployment.
The share of workers aged 25-54 who were employed was 80.6% in October — down slightly from a multi-decade high reached over the summer but higher than was seen in any month between June 2001 and January 2020.
For women aged between 25 and 54, the share who are in the labor force is near its highest level ever. So much for pandemic-era fears of a prolonged “she-cession.
Not only are people working, real wages are rising.
No matter your preferred wage growth measure, the data tells a similar story. While pay isn’t rising quite as fast as 2022’s breakneck pace, inflation has cooled much faster.
Not only that, wages finally began to outpace inflation this year; average hourly earnings for rank-and-file employees are up 4.4% over last year, and inflation is down to 3.2%. That should help keep consumer spending —a bedrock of the U.S. economy– healthy.
There are other grounds for gratitude:
The banking crisis that wasn’t. Eight months ago, the collapse of Silicon Valley Bank and two other large regional banks looked like the start of a banking crisis that risked choking off lending economy-wide. It hasn’t happened.
There have been no further major bank failures, and credit availability has generally remained stable.The government’s decision to use emergency authorities to make even the largest depositors in SVB whole instilled confidence in the banking system and prevented both mass outflow of deposits and large-scale contraction of bank lending.
If you are an enthusiast of the Fed’s H.8 report (Assets and Liabilities of Commercial Banks in the United States, as it is known) — and who isn’t — you will see that banks’ aggregate real estate loans, consumer loans and most other forms of lending are higher now than a year ago.
Commercial and industrial loans are down only very slightly, to $2.775 trillion in October from $2.777 trillion a year earlier.
And gas prices are coming down.
We need more media reports based upon economic reality, because there is a persistent difference between that reality and the public’s perception of the economy, which is much more sour than it should be in some areas, and far too sanguine in areas that ought to be seen as deeply troubling.
Take opinions about inflation. Polls show that Americans believe inflation to be much higher than the statistics show. There is scant media attention to the fact that the U.S. brought the rate of inflation down more rapidly than Europe (we won’t even discuss Argentina…)The annual inflation rate in the EC was 4.3% in September 2023, which was down from 5.2% in August. A year earlier, the rate had been 9.9%.
What is truly ironic is that Americans hold these negative beliefs about what has been genuinely positive performance at the same time that most are blissfully ignorant of far more worrisome aspects of the economy.
The average American believes that the richest fifth own 59% of the wealth and that the bottom 40% own 9%. The reality is strikingly different. The top 20% of US households own more than 84% of the wealth, and the bottom 40% combine for a paltry 0.3%.
That gap has not narrowed.
I have spent the last 30 years warning about the consequences of the low levels of civic literacy in this country. My focus has been on the nation’s constitutional framework–the Constitution, the Bill of Rights, and the philosophical premises that undergird those documents. I now realize–thanks to the persistent disconnect between economic reality and public opinion about the economy– that the country has major problems with economic literacy as well.
Our economy has problems. They just aren’t the ones a majority of our citizens recognize or understand. We aren’t going to be able to address those problems unless a majority of our citizens can accurately identify them. Basic economic literacy is just as necessary as constitutional literacy if the voting public is going to install public officials who understand those basics.
I’m beginning to understand why we have so few citizens who cast truly informed votes.Comments