What You See Is Not What You Get

Now you see it, now you don’t.  The economic recovery you’re hearing about but not seeing, feeling but not touching, must be here.  “The economy is improving — technically, it is. Growth this year will most likely average around 2 percent. The problem is, most Americans aren’t feeling it in their paychecks.”   People “aren’t spending more is they don’t have the money. Personal income was up just .2 percent in February — barely enough to keep up with inflation. As a result, personal saving as a percent of disposable income tumbled to 3.7 percent in February from 4.3 percent in January.”

The economy added 120,000 jobs in March (another way of looking at that would be to realize 120,000 people, or an entire mid-size city, were out of work); this dropped the unemployment rate from 8.3 to 8.2 percent.  A report of two months ago notes that “the increasingly visible statistic shows that roughly 11 million working-age Americans are being excluded from the nation’s formal tally of 13.75 million unemployed Americans.”  True, this only leaves 24,750,000 unemployed.  Since that’s less than the population of California we don’t have much to worry about.

Robert Reich, economic adviser to President Clinton, is good enough to remove any hope that the increase in employment might have inspired in you.  “Real spending (adjusted to remove price changes) this year hasn’t been going anywhere. It increased just .5 percent in February after an anemic .2 percent increase in January.  The reason consumers aren’t spending more is they don’t have the money. Personal income was up just .2 percent in February — barely enough to keep up with inflation. As a result, personal saving as a percent of disposable income tumbled to 3.7 percent in February from 4.3 percent in January.”

It should seem obvious that if employment is increasing, but personal income is not increasing, and neither is personal saving, that we need  change our economy.  If “consumer spending is 70 percent of the economy” – and I don’t spend money on much else – and employers won’t hire without increased consumer spending (and consumers don’t have any increase in the amount to spend) then we need to try a new system.