The US economy has deteriorated over the last year as badly as at any time in recent history outside a global recession. The fact that so many Americans – possibly a majority – believe the opposite is an intriguing case study in mass hypnosis.
How do we know things are actually bad, when virtually everyone across the political landscape and throughout the media accept the triumphant tweets that it is “best ever” or “best in the world”?
We know this from the official data released quarterly, monthly, weekly or, in some cases, daily from the various statutory authorities. And we can check progress in the USA on all these measures with what is happening in other countries.
In fact, the economy is performing poorly on 22 of the 26 key variables. This has nothing to do with the coronavirus. These outcomes were recorded before that threat emerged.
We can readily assemble the 26 critical variables into four levels: doing very well, about average, below average and tracking disastrously.
Sectors performing very well
This is the category for outcomes showing strong progress relative to earlier periods, and ranking among the world’s best as recorded by Trading Economics or the World Bank or the OECD. Currently, there are none.
Sectors showing average or above average outcomes
Four variables are now tracking above average: unemployment, youth joblessness, median wealth and personal savings. We will look at these in detail shortly.
Below average outcomes
Fourteen variables are now performing below par. These are interest rates, inflation, wages growth, homelessness, economic growth as measured by annual growth in gross domestic product (GDP), GDP per person PPP, consumer spending, underutilization of workers, the housing index, industrial production, mining production, tourism, corruption and retail and wholesale trade.
Disastrous outcomes, close to world’s worst
Eight areas of the US economy are now performing at or close to worst – in US history, or relative to other developed countries, or both. These are manufacturing activity, exports, the trade deficit, federal government spending, government revenue, the budget deficit, federal debt and the interest payable on the debt.
We shall look at all of these in due course and track where they are now, how they compare with other countries and where they should be in the USA today.
(This analysis does not include job participation, consumer confidence, business confidence or stock market values. These are not reliable indicators of the health of the economy.)
Well-performing outcomes in detail
The decline in the jobless rate in February from 3.79% a year ago down to the 50-year low of 3.52% is most welcome. But it is not great, given the recent global surge in trade, profits and employment. The US jobless rate today ranks a lowly 49th globally. Many well-managed economies now enjoy all-time low jobless rates, not just 50-year lows.
As shown in the graph, above, the jobless rate fell 1.20% through President Trump’s first three years. This is better than the first terms of Reagan, Obama and the two Bushes, but not as good as the Clinton and Carter first terms nor the Clinton, Reagan and Obama second terms.
Youth unemployment is down to 7.7%, better than the global average, but behind the leaders. The Netherlands is at 6.4%, Germany 5.6%, Japan 3.6% and Switzerland 2.3%.
Median wealth per adult, according to Credit Suisse, increased from $64,015 in 2018 to $65,904 in 2019, a rise of 2.95% per year. Not bad. This ranked a modest 22nd in the world both years.
By the end of 2018, personal savings by Americans came to 8.8% of disposable income. This slipped back to 7.9% when last reported in January, ranking 24th among the 36 developed economies.
We shall examine the other 22 of these 26 variables in coming days and weeks. Meanwhile, readers are warmly invited to add to this list of variables, showing the data sets over time, and comment on the findings published here.
More soon ...