The soothsayers have slaughtered the ox and are examining the gloppy entrails for signs: rising unemployment, a falling dollar, weak consumer spending, the credit crisis, a swooning stock market. Could there be something wrong here? Could we actually be approaching a, God forbid, recession?
To which the only sane response is: Who cares? According to a CNN poll, 57 percent of Americans thought we were already in a recession a month ago. Economists may complain that this is only because the public is ignorant of the technical–or at least the newspapers’ standard–definition of a recession, which specifies that there must be at least two consecutive quarters of negative growth in the GDP. But most of the public employs the more colloquial definition of a recession, which is hard times. If hard times have already fallen on a majority of Americans, then “recession” doesn’t seem to be a very useful term any more.
The economists’ odd fixation on growth as a measure of economic well-being puts them in a parallel universe of their own. WorldMoneyWatch‘s website tells us that, for example, that “The GDP growth rate is the most important indicator of economic health. If GDP is growing, so will business, jobs and personal income.” And the latest issue of US News and World Report advises, “The key… for America is to keep its economy growing as fast as possible without triggering inflation.”
But hellooo, we’ve had brisk growth for the last few years, as the President always likes to remind us, only without those promised increases in personal income, at least not for the middle class. Growth, some of the economists are conceding in perplexity, has been “de-coupled” from mass prosperity.
Growth is not the only economic indicator that has let us down recently. In the last five years, America’s briskly rising productivity has been the envy of much of the world. But at the same time, real wages have actually declined. It’s not supposed to be this way, of course. Economists have long believed that some sort of occult process would intervene and adjust wages upward as people worked harder and more efficiently.
And what about the unemployment rate? The old liberal faith was that “full employment” would create a workers’ paradise, with higher wages and enhanced bargaining power for the little guy and gal. But we’ve had nearly full employment, or at least an unemployment rate of under 5 percent, for years now, again, without the predicted gains. What the old liberals weren’t counting on was a depressed minimum wage, impotent unions, and a witch’s brew of management strategies to hold wages and salaries down.