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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (28555)	9/12/2006 3:18:42 PM
From: neolib	Read Replies (2) \| Respond to of 541055

1995-1999 was a very good period for the economy than in 2000 you have the collapse of the tech bubble and a recession. They aren't comparing two periods that are the same part of the economic cycle, there comparing middle to top of one with bottom to perhaps middle of another. I posted it more since you had earlier made the observation the since GDP advanced significantly in the 2000-2005 period, you thought it unlikely that income could decrease. This data indicates that is the case: During the five years from 2000 to 2005, the US economy grew in size from $9.8 trillion to $11.2 trillion, an increase in real terms of 14%. Productivity - the measure of the output of the economy per worker employed - grew even more strongly, by 16.6%. But over the same period, the median family's income slid by 2.9%, in contrast to the 11.3% gain registered in the second half of the 1990s. So neglecting the the 1995-1999 comparison, the five year period of 2000-2005 was interesting in that reasonable GDP growth coupled with very good productivity growth, resulted in poor median family income. I think what they note: 1) continued growth of income disparity, and 2) poor job growth, most likely account for this, although IMO, productivity growth itself might be a significant issue in a stagflation sort of way. We have long assumed that productivity is an economic miracle, (at least, so thought Al) but perhaps there are some issues, and in particular, I wonder if there might not be trasient issues with it. Worth pondering. Regarding the 4.7% unemployment being historically low. It is well known that this rate is lower than expected for the jobs created, the difference being attributed to unemployed who drop out of the labor seeking market. This has led to a downward revision of the estimated number of jobs the economy needs to add to stay even on population growth, with even some of the Fed members musing about what this number "should" be. IIRC, they are drifting down towards 100K/month, when I think 200K used to be considered breakeven. An interesting topic on its own.