The economy has been on the road to recovery since mid-2009, when the Great Recession officially ended. But, for most Americans, recovery is not there yet, and, at the recent rate of progress, it won’t be for a long time, if ever.
New census data on income and poverty, released on Tuesday, show that median household income barely budged in 2013 for the second year in a row, following two consecutive annual declines. At nearly $52,000, it is still 8 percent below its level in 2007 before the recession. To make matters worse, the income declines from the recession came on top of losses carried over from the prior business cycle from 2000 to 2007. In all, median household income in America is 8.6 percent below its peak in 2000.
The situation is even bleaker for households led by people under age 65. Unlike older households, their income is not usually cushioned by steady Social Security payments; instead, they rely largely on paychecks in an era of flat or falling wages. For them, median income from 2000 to 2013 declined 11.2 percent, from nearly $65,800 to $58,450.
Even positive news in the report is overwhelmed by dismaying longer-term trends. The poverty rate fell from 15 percent in 2012 to 14.5 percent in 2013, the first meaningful year-to-year decline in seven years. (The poverty threshold for a family of four in 2013 was $23,834.) But the rate is still well above its levels of 12.5 percent in 2007 and 11.3 in 2000. The Center on Budget and Policy Priorities has calculated that, at the recent pace of poverty reduction, it would take until 2020 for the rate to fall below the level in 2000.
Similarly, poverty among children fell from 2012 to 2013, but remains above its levels in 2007 and 2000. The improvement, such as it is, appears to stem from a rise in the employment and earnings of low-income parents. That is, of course, a positive sign in any recovery: When jobs begin to grow, low-income groups hit the hardest in the bad times should show clear signs of a rebound.
It also means, however, that further economic progress will depend on even more jobs at even higher pay. But several policy makers in Congress and at the Federal Reserve believe it is time to back off from remaining stimulus policies. Federal spending already has been cut, and safety-net programs like federal jobless benefits have ended. The push now is for the Fed to raise interest rates — using monetary policy not to combat joblessness, which is real, but to combat inflation, which is not.
Progress toward economic health has been and continues to be slow and unreliable. That’s because the policy response never was and probably never will be commensurate with the damage caused by the serial recessions and poor recoveries since 2000.
— New York Times,
Sept. 16
