Economix: Still Playing Catch-Up, Across the Economy

Given that the downturn began nearly four years ago, and that the population has grown significantly since then, the economy should instead be bigger than it was before the financial crisis. But Calculated Risk, a finance blog, makes a good observation: On most major measures of economic health, the economy is still worse today than it was before the recession began.

CATHERINE RAMPELL

Dollars to doughnuts.

Here’s a chart I’ve put together showing the percentage changes in several important economic indicators since the start of the recession in December 2007. The categories are: overall economic growth (gross domestic product), jobs (nonfarm payrolls), personal income (without transfer payments from the government, like unemployment benefits), the length of the workweek, personal spending, and industrial production.

Source: Bureau of Labor Statistics, Federal Reserve, Bureau of Economic Analysis, all via Haver Analytics

As you can see, all of these categories but one are still below where they were when the recession began. Industrial production is by far the worst off, since an index of this activity is nearly 8 percent below its level in December 2007. Second-worst is employment; today there are 5 percent — or about seven million — fewer payroll jobs than there were when the recession began.

Inflation-adjusted personal income and gross domestic product are still below the last business cycle peak, as is the average work week.

The one major indicator shown that is (barely) above its level at the start of the recession is inflation-adjusted consumer spending. Much of that growth has been subsidized by government transfer payments, however. And to further rain on this parade, remember that if the economy were healthy, consumer spending would probably be much higher today than it was before the recent recession. Just take a look at the longer-term trend:

Source: Federal Reserve Bank of St. LouisFigures on left axis are expressed in “chained” dollars — inflation-adjusted, in 2005 dollars.

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