ECONOMIST: We Are Witnessing The Collapse Of Personal Incomes

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Photo: PRI’s Studio 360 via Flickr

Richard Yamarone, Bloomberg Brief senior economist, has noticed some stark differences between the current recession and past recessions. He says that in each of the first eight recessions after World War II, it took roughly 20 months to regain jobs that were lost during a recession.But Yamarone says that in the 50 months since the Great Recession, we are not even close to getting jobs back.

From King World News:

“In fact, the first eight recessions after World War II, it took, on average, 20 months for us to respond and get all of the jobs that we lost during the recession back.  So, in a little less than two years the Fed policy response would get all of the jobs back.

However, you look at the last two recessions, in ’90/’91 and the 2001 recession, they were jobless recoveries.  We don’t respond to monetary policy the same way because we are no longer that manufacturing behemoth.  So the Fed cuts rates at the first sign of trouble and it takes, during those recessions, 40 months for us to get back all of the jobs we would lose. 

In this current recession, we are not even close (to getting the jobs back) and that’s 50 months and counting.”

Yamarone added earlier in the interview that small businesses are struggling the most. These he says account for 99.7 per cent of all employer firms in America.

“You hear from the other side, ‘Hey, I finally got a job after two years of being unemployed.  I used to make $100,000 (each year), now I’m making $45,000 or now I’m working part time.’  Or (you hear), ‘I used to make $500,000 and now I’m making $200,000 or making $125,000.’

“So you are actually seeing this collapse, contracting on a real basis, of real disposable personal incomes.  If you don’t have the money, you can’t facilitate expenditures.  So that’s the core of the problem.  That’s what’s really going on in the US economy.”

Read the entire piece on King World News >

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