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Unemployment claims haven't budged this year—they've averaged 374K per week, and that's the latest figure as well. So although the economy is not improving meaningfully, neither is it deteriorating. But there are improvements on the margin, as shown in the chart above. The number of people receiving unemployment insurance has dropped 18.5% relative to a year ago, and that represents 1.2 million people who are either now working or who have an increased incentive to find and accept a new job.
Those who are working are seeing ongoing increases in their real incomes. Even though there are 5 million fewer jobs today than at the peak in early 2008, real incomes have reached a new high. Real incomes have risen at a 3.6% annualized pace over the past six months, and reeal disposable income is up 2% over the past year. None of this is anything to write home about, but it is still progress.
The economy continues to grow at a modest pace.
5 comments:
Believe it or not, the government double counts income when they report personal income. They included both transfer payments and government employee income. Trouble is, both are paid out of the personal income of the private sector.
The NBER (1) subtracts transfer payments from the personal income figure. They also adjust for inflation. So you don't have to believe me that the government double counts.
The reported 3.4% annualized growth in personal income January through July of this year goes down to 1.4% according to NBER. For the sake of truthfulness, the government reports this figure too on page three. I subtracted out 75% (2) of government employee income as well and get .8% annualized growth in inflation adjusted personal income. That sucks. And this doesn't even adjust for per capita growth of personal income.
(1) NBER (National Bureau of Economic Research) is charged with the task of pin pointing the beginning and end of recessions. They use four main economic indicators, one of which is inflation adjusted personal income after subtracting transfer payments.
(2) I use 75% to account for the fact that government employees pay taxes and their taxes are included in the personal income report. (A federal government employee living in an income tax free state, doesn't pay any income taxes at all.)
A lot of people want to increase the taxes on wages to pay for the life style of the retired. You can argue lifting the cap on the social security wages or raising Medicare tax rates but in a macro economic picture, you can't tax much more without making real personal income of the private sector go into negative growth.
Scott, you said that "those who are working are seeing ongoing increases in their real incomes." Assuming we agree that "real" income is inflation adjusted, the data I have is not leading me to the same conclusions. More at:
http://wjmc.blogspot.com/2012/07/us-real-working-wages-stagnate-since.html
http://wjmc.blogspot.com/2011/09/us-real-income-trends-downward-since.html
The evidence I see is confirming that real (inflation adjusted) working incomes have been flat in the US for the past forty plus years.
What say ye...?
PS: I am going to do my own deep dive into the data and see for myself...
Those who are working are seeing ongoing increases in their real incomes.
If you are going to make a statement about employment income, then chart employment income.
Otherwise, real personal income growth ex-current transfer payments sucks.
I just saw a graph of the percent of personal income that comes directly from the government. In 2007-08 it was 14%; now its 17.5%. Therefore, 3.5% of personal income has been like a hand out not from a true economic basis. I wonder if Mr Grannis considers this to be significant?
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