A colleague tried to corner me, saying: “You have to admit, the economy is doing pretty good, right?” It amazes me what people will say in the face of overwhelming data to the contrary.
The first quarter of 2014 yielded a 0.1% GDP growth according to the Wall Street Journal; hardly the stuff that economic dreams are made of. In fact, in looking at the 2009 “recovery,” I’m hard pressed to find any Field of Dreams in the GDP.
What’s worse is this though: the share of economic growth (as measured by the percentage of GDP growth) going to labor has actually fallen. Through 1970, 3% of GDP growth has gone to those participating in the labor force. Today, it’s 0.9%.
Let’s be clear: U3 (standard unemployment rate) doesn’t measure anything other than a hallucination at this point.
In 1970, the minimum wage was $1.45 per hour. According to my inflation calculations, that would make minimum wage $8.59 in 2013. In real 2013 dollars, minimum wage as a percent of GDP growth would be: 8.59x.09=7.73 per hour.
Not only can’t wages keep up with inflation, it can’t even keep up with its dismal share of GDP growth. That’s not the stuff that economic dreams are made of.
And it gets even worse. Real Exports are just sad. Exports have shrinking steadily overall since 2010, and according to the last quarter’s Fed data, we are importing more than exporting.
So the only real thing that I have to admit, based on the data, is that Wall Street is really doing pretty good! Unfortunately, Wall Street is not the economy; though I have to admit, with the new Renteir Class, it is becoming that way. Hopefully, GDP will not be measured by just investments. Until it is, denial seems to be a river on Wall Street.