Looks Like We're In a Recession, Not a 'Recovery'
There seems no place to hide. Americans have seen the value of their stock portfolios crash this week. The S&P 500 and NASDAQ have both lost about 8 percent of their values, and they are headed down again today.
This week the Japanese NIKKEI stock market also lost over 9 percent of its value. And the UK's FTSE has lost over 11 percent. The German DAX about 13 percent.
So much for promises that if we only passed the debt ceiling increase the stock markets would be calmed.
Everyone was waiting for today's unemployment numbers to be released. The 117,000 new jobs temporarily lifted spirits because the number was better than what many had expected, but it was still not enough new jobs to even absorb more than three-quarters of the growing working-age population. Unemployment fell because 193,000 more people simply gave up looking for work.
Indeed, people giving up looking for work has been the hallmark of the Obama administration. People are supposed to start looking for work during recoveries. It is during a recession that Americans give up looking for work.
But during the Obama "recovery" about 2.8 million more Americans have given up and completely stopped looking for work.
We have gone from about 34 to 36 percent of the working age population. That is almost the mirror opposite of what happened during the Reagan recovery (see figures here).
But maybe we are still in a recession. During the first half of this year, GDP has only grown by 0.4% (an annual rate of 0.8%). That isn't even enough to keep up with population, which grows at an annual rate of about 1 percent. Real income is thus falling. That seems like the definition of a recession. Surely for a huge number of Americans with unemployment stuck at over 9 percent and that not even reflecting more and more Americans giving up looking for work, this sure seems like a recession.
Fear that the U.S. economy may be heading into a double-dip recession, even if we are not already there, is driving down expectations in the stock market. But the markets didn’t need to wait for these unemployment numbers. This week new numbers showed that the demand for durable goods, factory orders, and consumer spending were all reported to have fallen. Manufacturers recorded their weakest growth in two years.
Unfortunately, the new unemployment numbers today, with more Americans giving up looking for work, looks like a recession, not a recovery.
John R. Lott, Jr. is a FoxNews.com contributor. He is an economist and author of the revised edition of "More Guns, Less Crime" (University of Chicago Press, 2010).