Come on, tell the truth. Do you really feel like the recession's over? Of do you feel like maybe it's over for the economists, but it isn't over for you?
If GDP is growing like they say it is, why do you feel like you're treading water? Okay, let's be honest here. Why do you feel like you've been treading water for years? Or (gasp!) maybe even slipping? And why does it seem like just about everybody you know is in the same boat as you?
There really is an answer to this. And it's a simple, little number compiled by the Bureau of Labor Statistics (BLS) called "Average Weekly Wages". This little number -- almost never quoted in the press -- is the average amount people earn every week, adjusted for inflation. And the sad truth is, according to the BLS, this number has actually gone down somewhat since Richard Nixon was in office.
If you think that can't be true, you're right. It's really much worse.
Because the BLS is cheating. In order to make it look like real wages have only gone down a little bit (and do a few other things, like pumping up GDP and keeping the cost-of-living adjustments on Social Security to a minimum), instead of using a constant measure of inflation, the BLS keeps changing its methods to make it look like prices are going up less than they are. If you calculate inflation on a constant basis, for example, applying the method the BLS used before Bill Clinton came to office, Average Weekly Wages have actually gone down more than the BLS admits. A whole lot more.
There are a bunch of of reasons most people don't realize what's going on. First of all, nowadays, more people in the family are working -- Mom's working, Dad's working, the kids are working -- everybody's working. (Or anyway, they would be working, if they could find a job.) If you add up all those jobs, it amounts to about as much as one person used to make when Tricky Dick was in office.
The second reason we don't see what's going on is that -- at least until recently -- the things we owned were going up in value, so it made us feel richer. If we needed money -- for college, for a medical emergency, even for a vacation -- we could always borrow against the house.
No more.
The third reason is, consumer goods have been cheap. Why? Well, the main reason is that the industrial revolution finally came to Asia, so hundreds of millions of Chinese, Indians, Indonesians,Vietnamese, and Malaysians have been streaming into the cities from the farms, flooding the markets with cheap labor. The result is, you can buy a suit or a sweater or a dress for less than what you paid thirty years ago, adjusted for inflation. The only problem is, the suit or the sweater or the dress has to be made in Asia. And that means they're aren't any jobs making suits or sweaters or dresses (or toys or tools or TVs) in America anymore. And that's one reason jobs are a problem.
Another reason we don't see what's going on is that the government and the financial media are so good at hiding the problems. Economic statistics are now gamed to such an extent that they're nearly worthless. By the magic of the "birth/death" model, millions of new jobs are assumed into existence on the theory that new businesses have been created, even though there is absolutely no evidence any new businesses have actually been created. Through "hedonic adjustments", the prices of products that have actually gone up are "adjusted" to have gone down on the theory that their quality has improved. By "geometric weighting" it is assumed that if the price of an item goes up, people will use less of it, and therefore it's impact on inflation automatically goes down.
We hear constantly on television that Americans have the highest standard of living in the world, the best health care and so on. So we believe it.
If you want to keep on believing it, go ahead.
It won't be true, but maybe it will help with that sinking feeling.
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