Our Economic Recovery

If you believe what you read in the papers, we are in the midst of a genuine, bona fide economic recovery. You can tell because the bad numbers are smaller and the good numbers are bigger. The unemployment rate has stabilized at 8.3 percent, we’ve added a little over two million jobs to the national payroll over the past six months, and the stock market’s up. It’s morning in America, everyone!

Journalists started talking like this during last week’s news cycle. Every show and newspaper featured at least one story about the numbers getting better, usually capped with some economist cautioning, with a carefully vacuous caveat, that “This number is good. But there are also other numbers. In the future, there may be more numbers.” Seriousness!

Some politicians are eagerly presenting the latest figures as evidence that we’re all going to be OK. But we’re not. Even Americans with jobs are lacking basic financial security, earning wages that are actually shrinking when adjusted for inflation.

The unemployment rate is also blind to underemployment. A 20-hour-a-week gig at a Sears cash register makes you “employed,” whether you’re a high school student, a 57-year-old telephone lineman, or a law school graduate. The term is “employed,” not “gainfully employed.” You can be hustling backwards working three part-time jobs or you can be crushed under debt, you can be literally dying of a chronic illness you can’t afford to treat, but you’re still just “employed” to the Bureau of Labor Statistics. The Bureau measures whether you’re in the employment pool. It doesn’t measure whether you’re drowning.

Stock prices are an even less reliable indicator of how well we’re doing. Of course, journalists rely on them and probably always will, because stock prices make for easy reporting. You can regurgitate them without having to do any research and they change constantly, so they’re constantly newsworthy. The stock market is basically another form of weather for journalists. It doesn’t matter where the numbers actually come from any more than it matters why sunlight is warm.

Right now, those numbers come from computers. A handful of mutual and hedge funds use proprietary computerized algorithms, and these programs perform the vast majority of stock trades. They hedge stock prices up and down in accordance with formulae based on previous market activity. The stock market is just a conversation between these computers, an economic debate in a UN of Skynets. For a modest management or processing fee, you too can own stocks, and then you can watch the nightly news and see your investments jump up and down, rolling and pitching like hapless little boats. It’s very exciting.

These computers will twitch the numbers up and up and then they’ll collapse and you have nothing. And then the computers will twitch the numbers back up again. If you sell at the right moment, and if you have at least several hundred thousand dollars of equity in the market, then your kids can go to college and you can retire. If you wait too long, act too soon, or have too little, then you can just work into your grave.

You’ll be lucky if you even get crumb of the computer-sliced pie. The top one percent of wage earners captured 92 percent of the income from all those sparkly new jobs and, as of 2007, the top 10 percent controlled approximately 90 percent of outstanding stock. So unless you happen to be incredibly wealthy, these numbers are just passing you by. “Economic recovery” is euphemism for the return to a status quo that nearly broke the nation’s back. The numbers may well be good for the US economy. But the US economy probably doesn’t work for you.