Census Data Provides More Evidence of the Lost Decade; Plus Must Reads on the Economy

Examining recently released census data, the Wall Street Journal today describes a “Lost Decade for Family Income,” in which median household income fell and poverty increased dramatically:

The [census] bureau's annual snapshot of American living standards also found that the fraction of Americans living in poverty rose sharply to 14.3% from 13.2% in 2008—the highest since 1994. Some 43.6 million Americans were living below the official poverty threshold, but the measure doesn't fully capture the panoply of government antipoverty measures.

The inflation-adjusted income of the median household—smack in the middle of the populace—fell 4.8% between 2000 and 2009, even worse than the 1970s, when median income rose 1.9% despite high unemployment and inflation. Between 2007 and 2009, incomes fell 4.2%. 

The income decline and poverty increase are not just about the recession. They are critical features of America’s lost decade. The article continues:

The bureau said that the drop in income in the recent recession, so far, wasn't much different from those recorded in the early 1990s and early 2000s recessions, and was actually smaller than the 6% drop recorded in the deep recession of the early 1980s.

But there is a difference this time: In the prior three recessions, incomes fell after years of upswing, then resumed growing once the downturn ended. The decline this time comes on top of a long period in which incomes stagnated even through the recovery of 2003 to 2007.

This additional, distressing evidence is part of what we at NDN described as "A Lost Decade for Everyday Americans" in a paper released in December of 2009. As we argue in that paper, it’s impossible to understand the economic condition of everyday Americans today or the virulence of the Great Recession without understanding the stagnating wages, declining median income, zero private sector job growth, and rising costs that hit American households over the last decade.

Additional important news on the economy this week:

  • A report released by the Joint Economic Committee finds that worsening income inequality, in large part precipitated by policies of the Bush Administration, may have been a root cause of the Great Recession. It also finds that, under Bush, everyone’s economic situation got worse. Again, more evidence of the Lost Decade.
  • Building on Lori Montgomery’s Washington Post coverage of Mitch McConnell’s plan to increase deficits by $4 trillion over the next decade, the Economist’s “Politics in America” blog takes down Mitch McConnell’s view of taxation.
  • On the legislative strategy on the Bush tax cuts, Congressional leadership would do well to listen to The New Republic’s Jon Chait. It should also encourage its membership to read this poll, this poll, this poll or this poll. And then there are this poll and this poll, too. (They all say similar things: the politics of this issue are good for the majority.)
  • The Senate passed a bill to cut taxes and provide loans for small businesses. 
  • Ben Smith at POLITICO explores how TARP, despite the reality of its success, is politically unpopular. Foreign Policy blogger and Tufts University professor Dan Drezner writes that TARP is an exception rule that good policy leads to good politics, mainly because people don't know how good TARP actually was. Let me suggest a slightly different interpretation than ignorance. TARP wasn’t bad policy in a narrow sense – policymakers placed a large, successful bet on the future prosperity of the financial industry that saved the country from a depression – but it was incomplete policy and bad politics to everyday Americans in that, on taking dramatic action to halt and repair the damage on the financial side, we started and stopped at TARP. With almost a quarter of outstanding mortgages still underwater and the financial standing of millions of households still in disastrous shape from the meltdown of the housing and financial markets, the American people might have liked to have seen a commensurate bet placed on their futures. (Hence the refrain, “Where’s my bailout?”)
  • And, Chinese currency and economic issues are back, having never really gone away.


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