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Recession Never Ended & Will Not Until A Depression Occurs
Monty Pelerin / EconomicNoise.com
Our country is getting poorer. Part of the decline is due to the economic recession; part of it is due to the secular decline that has been addressed in several articles on this website (here is a recent one). Sentier Research recently released a report detailing what has happened to median incomes in this country:
After adjusting for changes in consumer prices, median annual household income declined during the recession, from $54,916 in December 2007 to $53,508 in June 2009. During the “economic recovery,” real median annual household income continued to decline, standing at $50,964 in June 2012. (Income amounts in this report are before-tax money income and are presented in terms of June 2012 constant dollars).
We were told that the “recession” ended in June 2009. Most people don’t believe we exited the recession and there is little evidence that these people are wrong. Overwhelminging negatives still dominate the so-called recovery:
- Unemployment remains at abnormally high levels, despite the favorable accounting for people who have given up and left the labor force.
- Tax revenues continue to lag.
- GDP, which normally roars at the end of a recession, is dismal.
- Massive stimulus has been tried to alter these issues, but have failed to do so.
- The government has wasted resources and committed future generations to over $5 trillion in new debt.
- There has been no growth surge (usually quarterly GDP growth of 5 – 6% coming out of a recession. Instead growth lingers around 2% with expectations that we are going to have a “double-dip.”
Sentier Research provides evidence that there has been no end to the recession. These changes, from June 2009 to June 2012, are consistent with a continuing recession:
- Real median annual income for family households declined by 4.7 percent, from $66,365 to $63,276. Real median annual income for nonfamily households declined by 7.5 percent, from $33,002 to $30,512. Within this group, the percentage decline for men living alone (9.4 percent) was significantly larger than for women living alone (4.5 percent).
- Real median annual household income for householders between 25 and 34 years old declined by 8.9 percent, from $54,520 to $49,659. Among households with a householder between 55 and 64 years old, real median annual household income declined by 9.7 percent, from $61,716 to $55,748. In contrast, real median annual household income for householders 65 to 74 years old showed an increase of 6.5 percent, from $39,548 to $42,113. Real median annual income of households in which the householder was working (or had a job but was not at work during the survey reference week) declined by 4.7 percent, from $69,758 to $66,459. For households in which the householder was looking for work or on layoff, real median annual household income declined by 22.6 percent, from $40,749 to $31,558. This steep decline in income likely reflects a larger proportion of long-term unemployed persons in the later time period.
- Real median annual income for households with a White householder (not Hispanic) declined by 5.2 percent, from $59,324 to $56,255. The real median annual income for households with a Black householder (not Hispanic) declined by 11.1 percent, from $36,567 to $32,498. Households with an Hispanic householder experienced a decline in their real median annual household income of 4.1 percent, from $41,967 to $40,265.
- Among households in which the householder has some college but no degree, real median annual income declined by 9.3 percent, from $50,948 to $46,200. For households whose householder has an Associate degree, real median annual income declined by 8.6 percent, from $60,602 to $55,374.
- Households in which the householder is self-employed had a decline in real median annual income of 9.4 percent, from $73,695 to $66,752. Households in which the householder is a private-sector worker had a decline in real median annual income of 4.5 percent, from $66,793 to $63,800. Households in which the householder is a government sector wage worker had a decline in their real median annual income of 3.5 percent, from $80,828 to $77,998.
- Real median annual income of households living in the West region declined by 8.5 percent, from $59,065 to $54,071. In contrast, for households living in the Midwest region, the measured decline of 1.1 percent, from $51,447 to $50,868, was not statistically significant.
- The median annual income of households in blue states was $56,441 in June 2012, down by 5.2 percent since June 2009. The median annual income of households in red states was much lower at $46,215 in June 2012, down by 5.0 percent since June 2009. The median income of households in purple (swing/battleground) states was intermediate between the other two categories at $51,430 in June 2012, down by 5.7 percent since June 2009
These are not statistics consistent with any recovery that I have ever seen or studied. Only a panicked, desperate government which has run out of options would dare declare the recession over. Only those more concerned about retaining power would pretend this period has been a recovery.
We are heading into a time which no one, including those who lived during the Great Depression, has ever experienced. Those suffering from the blind faith that a normalcy bias promotes are going to be devastated when the economic crisis finally occurs and blindsides them.
http://www.economicnoise.com
