The analysts at Wells Fargo have grown adept at producing important, and melancholy, charts of Obama’s weak economic growth. We’re stuck in an aching dry socket after the loss of an abscessed tooth, and the molar next door looks like it might be coming out, too.
The key measure in today’s Chart Of Doom, highlighted by James Pethokoukis at the American Enterprise blog, is real disposable income per capita. As you can see from the chart, it’s been terribly flat since early 2011.
This bodes ill for our future economic growth, because the only reason GDP growth in the first quarter of 2012 was mediocre, instead of awful, was robust consumer spending. You’ve got 2.9 percent growth in spending combined with essentially zero income growth. That’s not “sustainable,” to use a popular buzz word.
There’s also a seasonal factor to consider. A weekend article at the Wall Street Journal’s MarketWatch cites economists who “suspect the mild winter boosted hiring from December through February,” which essentially “stole” jobs from the spring. This would set the stage for continuing March’s poor job growth… and the surge in consumer spending was driven largely by flickers of confidence in the employment situation. This triggered a flurry of big-bucks purchases, most notably automobiles. It’s starting to look like a bubble, rather than a positive trend.
The other big problem signaled by those flat disposable income numbers is the quality of the jobs we’ve been adding during the non-recovery. Flat income growth means “burger flipper” jobs, to quote an extremely popular phrase from the early Bush years that our media appears to have forgotten. An earlier Chart of Doom from Wells-Fargo illustrates this point:
That’s what it looks like when a stagnant economy adds a lot of low-wage, part-time, and temporary jobs. According to Pethokoukis, hiring in “relatively low-paying industries” accounted for 40.7 percent of the jobs added over the past two years, even though they account for just 28.9 percent of the workforce.
It’s funny how the press isn’t hammering that point home, especially given how deeply concerned they professed to be about job quality, back when they were looking for a dark cloud among the silver linings of George Bush’s 4 percent unemployment rates.
What would a healthy job market look like? There would be high demand for labor, secured for long-term employment, with good wages and the possibility for advancement. Those conditions will never exist under a politicized command economy. Government cannot conjure them into existence with regulatory magic spells. There are really only two pro-active steps government can take to create robust, long-term growth: release large amounts of a valuable natural resource for private-sector development, or bomb our economic competitors into rubble. That’s what happened in World War II, a point overlooked by fashionable liberal “economists” peddling nostalgic visions of the high-tax, high-growth Fifties.
The government can also attempt to create brief spurts of growth, with fantastic expenditures of borrowed money, but they’re prone to screwing that up, because ideology and political payback trump rational investment strategy. The result is trillions more in debt to service, a few well-connected executives with piles of taxpayer money in their wallets, and a chief executive who laughs when he learns there’s no such thing as a “shovel-ready job.”
If you want steady growth, instead of nervous little politically-inflated bubbles, you need government out of the way. You want the people with large amounts of investment capital to find good opportunities, and feel safe in pursuing them. Investment is always a risk, and nothing draws adventurers better than good odds and big payoffs.
You also want existing enterprises to feel confident about expansion, because expansion is what produces long careers and high wages for the greatest number of employees. Expansion is less likely to occur when it makes the growing business into a target for predatory politicians.
And you want a thriving, competitive consumer market, because it does little good to bring home a solid wage when your money doesn’t buy anything worth having. Vote for the people who promise to ensure prosperity through price and wage controls, and you’ll soon find yourself paying ten dollars for a gallon of gas, using dollars that are worth a couple of 2012 dimes… if you’re lucky enough to have a job at all. In a robust economy, employment is not a prize won through good fortune.
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