Some feel we’re on the road to recovery, others shout doom. What objective criteria can we use to assess the economy. How Fragile Is The U.S. Economy Right Now?
Concern over the state of the U.S. economy has reached a fever pitch. Political pundits tussle over whether the end of the U.S. as the global economic engine has arrived. Opportunists are peddling “doomsday” kits so your family will survive the inevitable downfall of society. Conspiracy theorists are having a field day misinterpreting economic difficulties as part of a master plan by the people that “really” run the world. Take a deep breath. The economy is in bad shape. But that doesn’t mean that we’re about to live out Cormac McCarthy’s The Road any time soon.
So how bad are things right now, really?
The answer to this question partly depends on your vantage point. For some people the situation is disastrous. For others, it’s simply a bump in the road. There are however certain objective criteria that we can use to evaluate the state of the economy. These transcend political views, opinions and individual biases. These criteria center around one concept: Consumer demand. Consumers are the engine of the U.S. economy. Without strong consumer demand, our economic situation simply can’t improve. If people don’t buy your company can’t sell.
Jobs and wages are stalled
In my recent analysis of the American Jobs Act, I discussed the high rate of unemployment and underemployment faced by tens of millions of families across the country. A lack of jobs means a lack of demand from consumers. In addition to the employment rate, there are other work-related factors that hurt demand. The average number of hours worked by people that have jobs continues to decrease. In August this average fell by .1 hours to 34.2 hours per week. This is nowhere near the traditional 40-hour work week. Overtime hours, a lucrative source of cash for employees, on average totaled a paltry 3.2 for the entire month.
The average hourly wage in the country right now for all working people is $23.09. Over the past 12 months, it has increased by 1.9 percent. Before celebrating, read below about inflation.
Inflation is up, especially in energy
There are many measures of inflation. One of the most widely watched is the Consumer Price Index (“CPI”) which tracks the general increase in prices among a basket of goods and services purchased by consumers in large urban areas. It provides a general picture as to how expensive it is to live in the U.S.
