President Obama has sounded increasingly triumphant in recent weeks when talking about the state of the U.S. economy, using words like "booming" and listing new records. But his narrative is missing one big subplot: The experience of the typical American family.
“Since I have come into office, there’s almost no economic metric by which you couldn’t say that the U.S. economy is better and that corporate bottom lines are better. None,” the president said in a recent interview with the Economist.
Obama's “metrics” included:
» The stock market reaching record highs
» Corporate profits higher than ever
» 52 months of consecutive job growth and 10 million new jobs
» The deficit cut in half
» A booming energy sector, including clean energy production and carbon abatement
» The housing market improving
» The unemployment rate falling
Conspicuously, Obama did not mention wages or income.
Adjusted for inflation, average hourly wages reported by the Bureau of Labor Statistics are no higher now than they were when Obama took office in 2009. Other measures of compensation, such as the BLS' Employer Cost Index that also captures fringe benefits, tell a similar story.
Families are doing even worse in terms of wealth. The median household is roughly a third less wealthy now than it was 10 years ago, according to data from the Federal Reserve and the University of Michigan.
And while the economy has been adding jobs for years, sending the unemployment rate closer to normal levels, that doesn’t mean that the unemployment crisis is over. Last week, Obama’s top economic advisers told the Wall Street Journal that the labor market is about 80 percent of the way back to its pre-crisis level of health.
By some estimates, such as the one from the center-left Hamilton Project, that 20 percent or so difference between today’s economy and one that is functioning at potential is nearly 6 million jobs.
In an interview in late July, CNBC’s Steve Liesman challenged Obama for leaving families’ incomes out of his list of economic metrics.
“Well, yeah you're absolutely right,” the president acknowledged, adding, “I think you've heard me on the stump talk about [how] this is the source of anxiety for the American people.”
He explained that “these are 20, 30-year trends that we've been seeing.”
Whatever the cause of their slow income gains, Americans are less confident about economic conditions now than they were before the recession, as measured by consumer indices run by the University of Michigan/Thomson Reuters and the Conference Board.
And they don't share Obama’s view of the economy. Fewer than 40 percent of Americans approve of his management of the economy, according to the RealClearPolitics poll average. Fully 55 percent disapprove.
It’s clear that the president and his advisers, like officials at the Federal Reserve and professionals on Wall Street, anticipate economic growth accelerating in the near future, improving the situations of families, not just specific companies, industries or sectors. The economy, while still poor, is slowly and steadily improving, and has been for a while.