‘They’re Not Getting Anything’: Official US Economic Numbers Belie Decadeslong ‘Great Stagnation’
© AFP 2023 / ROBYN BECK
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While official economic numbers might look good, the reality is that for most Americans, their prospects have improved little over the last two decades, which is why US President Joe Biden has such little support, an expert told Sputnik.
The latest jobs report by the US Department of Labor showed a strong increase in jobs and a decline in unemployment, as well as an increase in hourly earnings, meaning that for the moment, the US seems to be allaying fears of an economic downturn.
The Friday report said the US economy added 187,000 jobs in July, less than the 200,000 that were expected but not enough to leave investors wary. The unemployment rate sank again to 3.5%, nearing a record-low amount. The report also said hourly earnings increased by 4.4%.
The news sent the stock market into a tailspin, erasing all gains made earlier in the day and leaving all indices with losses. However, it also reportedly solidified investors’ convictions that the Federal Reserve won’t raise interest rates at its next meeting in September.
John Ross, an author, economist, and senior fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told Radio Sputnik’s Political Misfits on Friday that while the Biden administration has tried to spin the economic trends over the past 2.5 years to reflect favorably on his economic program going into an election next year, the reality is that Americans have become used to poor economic performance.
27 July 2023, 01:31 GMT
“It depends what you mean by ‘working.’ You mean, is the Biden administration preventing the US’ very slow growth rate [from] collapsing into something which is an outright recession? Maybe,” Ross said.
He noted there “isn’t much practical difference” between 0.5% growth and 0.5% contraction of the economy.
“The key situation is the US economy remains locked into very slow growth. If you take a 20-year period, its average growth rate is 2%. If we go back to the 1960s, that would’ve been regarded as disastrous: the US economy at that time was growing right about 4.4-4.5% a year. So the way that one should characterize the present situation in the US economy is really the ‘great stagnation.’”
"What people don’t realize is that the US economy since 2007 has actually grown more slowly than during the Great Depression. It’s true that in the Great Depression there was a much more spectacular collapse between 1929 and 1931, the initial fall was much bigger. But, the economy began to recover, whereas the US economy [today] is just not growing fast.”
“So, by now we’re 16 years away from 2007, which was just prior to the international financial crisis. The US economy is actually growing more slowly than in the Great Depression, but for some reason the American media is going on about how good the economy is. Of course, real wages are falling, the population doesn’t feel it, and that’s likely to be unpleasant for Biden’s electoral prospects I would think.”
“What they feel is that they’re not getting better off” over the last two decades, Ross said. “If we go back to the 1950s and the 1960s, whatever you think about American capitalism, it was churning out 3%, 4% increase in living standards every year, people felt better, and therefore there was at that time quite a lot of political stability and people were not fed up. Today, they’re not getting better.”
“I mean, if you go up to someone and say ‘the GDP has grown by 2.6% but your real wages have fallen’, which is the case in the United States, he or she would say ‘why on Earth would I care if the GDP is growing at 2.6% if all the benefit of it is going to other people’ - which means, basically, it’s capital. So therefore, they’re not getting anything out of it and that’s why they’re discontent. If the economy was as good as Biden claims, he’d be 20% ahead of any rival in the opinion polls. But instead, his ratings are very bad and that’s because people are not better off.”
Turning to the issue of homelessness and housing costs, the hosts noted one recent study said that high housing costs in California have pushed people into homelessness, with similar things happening in New York and Washington, DC, among other major US cities.
“The situation of homelessness is getting very bad - not only in the United States, it’s getting worse here,” the UK-based commentator said. “But the truth of the matter is that the percentage of the population which is actually homeless is tiny. It’s horrible, I’m totally against it, but most people are not affected for it. What they’re hit by is, the housing costs are getting very, very high and it’s getting more and more difficult to get decent housing in America.”
“Everybody assumed that their children would live better than they did and that a young person, when they got into their 20s and got their first job, would be able to save up for 2 or 3 years, and then they’d be able to get a mortgage, they’d be able to pay for a mortgage and they’d own a house. But that’s not the case. Now, many people assume their children are going to be worse off - which is not an illusion, they may well be worse off - and the younger people find it harder and harder to get on the housing ladder. And that’s what’s really affecting the massive numbers of people.”
