The May jobs report came out today and showed an economy barely adding any jobs: Just 69,000 were added last month, and the unemployment rate increased. This follows news yesterday that GDP was revised downward for the first quarter, and a report today that real incomes remain essentially unchanged.
This really is not news. In fact, it is a pretty old story. The media likes to follow the short-term fluctuations in the economy to write stories about it gaining or losing momentum, but when you pull back from the news cycle you can see that things have been flat like this for well over a year.
To demonstrate this point, I want to look at three key metrics of the economy – employment, real GDP per capita, and real disposable income per capita. That accounts for jobs, growth, and income – a pretty comprehensive overview of how the economy is functioning as the average person feels it.
Most media reports look at these metrics by how much they’ve changed over the last month or quarter. That is how they can generate breathless stories about a robust recovery or an impending recession. But let’s look at changes over the last year. That will give us perspective on what the bigger trends are.
So, to start, here is employment:
This chart shows that employment growth has basically been flat for the last year. Just limping along somewhere between 1 and 2 percent growth, month in and month out, despite the breathlessness that greets the monthly jobs report. As a point of comparison, the population increases in this country by about 1 percent per year. So all we have been doing is basically treading water on jobs for a year.
What about GDP? The following chart tracks its annual growth rate controlling for population, to give us a sense of how much more or less the average person is producing every year.
Same basic story. After peaking in 2010, growth in real GDP per capita actually started decelerating. It has been pretty much flat for the last year.
Finally, what about incomes?
The story here is even worse. Again, we see a growth peak in mid-2010 followed by a deceleration, but incomes are actually declining now. It’s not just a matter of deceleration, it’s also that they are getting smaller!
This is President Obama’s big problem for the November election. This last chart suggests that the answer to Reagan’s old question – “are you better off now than you were four years ago” – is no. The average person is worse off under Obama.
Jay Cost is a staff writer for THE WEEKLY STANDARD and the author of Spoiled Rotten: How the Politics of Patronage Corrupted the Once Noble Democratic Party and Now Threatens the American Republic, available now wherever books are sold.