Tuesday, October 11, 2011

Country out of recession, people still in recession?

The NYT has this (see article here) excellent graphic that captures the incongruity of any formal declaration of the end of recession in the US. Adjusted for inflation, median household incomes have continued to fall unabated despite the formal end of recession.

Then there is the biggest problem facing the US economy, an unprecedented jobs crisis. Unemployment rate appears to have hit at plateau at around 9%. As the graphic below shows, rate of non-farm job creation has declined precipitously in comparison to the nineties.

Ironically, even as households are bearing the brunt of the recession and the jobs crisis shows no signs of an end anytime soon, the rest of the economy appears to have made smart recoveries. The profits of non-financial corporations has recovered to pre-crisis levels and non-financial businesses are sitting on cash surpluses worth more than $2 trillion.

And Wall Street, especially the bigger institutions, appear to have regained much of lost ground - financial sector profits and executive compensation are back to business as usual.

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