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Are happy times here again?

Thumbnail image for Unemployment Chart310.JPG

Business Week's Mike Dorning says that the economy is recovering much more swiftly than the political system, which tends to focus on polls, realizes.

A Bloomberg national poll in March found that Americans, by an almost 2-to-1 margin, believe the economy has gotten worse rather than better during the past year. The Market begs to differ. While President Obama's overall job approval rating has fallen to a new low of 44%, according to a CBS News Poll, down five points from late March, the judgment of the financial indexes has turned resoundingly positive. The Standard & Poor's 500-stock index is up more than 74% from its recessionary low in March 2009. Corporate bonds have been rallying for a year. Commodity prices have surged. International currency markets have been bullish on the dollar for months, raising it by almost 10% since Nov. 25 against a basket of six major currencies. Housing prices have stabilized. Mortgage rates are low. "We've had a phenomenal run in asset classes across the board," says Dan Greenhaus, chief economic strategist for Miller Tabak + Co., an institutional trading firm in New York. "If Obama was a Republican, we would hear a never-ending drumbeat of news stories about markets voting in favor of the President."

Little more than a year ago, financial markets were in turmoil, major auto companies were on the verge of collapse and economists such as Paul Krugman were worried about the U.S. slumbering through a Japan-like Lost Decade. While no one would claim that all the pain is past or the danger gone, the economy is growing again, jumping to a 5.6% annualized growth rate in the fourth quarter of 2009 as businesses finally restocked their inventories. The consensus view now calls for 3% growth this year, significantly higher than the 2.1 % estimate for 2010 that economists surveyed by Bloomberg News saw coming when Obama first moved into the Oval Office. The U.S. manufacturing sector has expanded for eight straight months, the Business Roundtable's measure of CEO optimism reached its highest level since early 2006, and in March the economy added 162,000 jobs—more than it had during any month in the past three years. "There is more business confidence out there," says Boeing (BA) CEO Jim McNerney. "This Administration deserves significant credit."

Over at the New York Times, Floyd Norris agrees, and spends some time trying to figure out why "good news [is] being received with such doubt." Kevin Drum, meanwhile, makes the case for continued pessimism.

Graph credit: Steve Benen/The Washington Monthly.

By Ezra Klein  |  April 12, 2010; 8:19 AM ET
Categories:  Economy  
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A rising market on thin volume is not a good indicator of a healthy economy.

Posted by: WrongfulDeath | April 12, 2010 8:25 AM | Report abuse

A nearly 10% unemployment rate with a real unenployment rate of almost 20% probably has something to do with the everyday person's pessimissm about the economy. First time unemployment filing were up last week also. I find it interesting that the liberal news media is now trying to peddle the theme that the economy is actually doing better than what the polls indicate, whereas in the past two elections, when the Republicans were in charge, it was the exact opposite. Couldn't be because the MSM is in the tank for Obama and Democrats in general could it?

Posted by: RobT1 | April 12, 2010 8:46 AM | Report abuse


i'll continue to hope the economy will continue to improve and I do believe President Obama deserves a lot of credit for the improvement but I just hope you'll be on here touting negative reports and cheerily as you'll tout optimistic ones. Otherwise you're as fair and balanced as Fox news is. Well maybe not quite that bad but you get the idea.

Posted by: visionbrkr | April 12, 2010 9:38 AM | Report abuse

even Robert Samuelson is striking a chipper note! Now that's downright weird.

Posted by: bdballard | April 12, 2010 9:45 AM | Report abuse

And then there's this: "Arbiters Hold Off on Declaring End to Recession," from today's Times. “Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature,” the group at the National Bureau of Economic Research said in a statement. Such an acknowledgment is rare in the history of setting dates to business cycles and could affect the behavior of investors and consumers.

Of course, they held off on declaring the recession had started for 11 whole months.

Posted by: JJenkins2 | April 12, 2010 9:57 AM | Report abuse

Yet Sewell Chan of the NYT has a story on the NBER not being willing to certify that the recession is over and cautiously protecting their reputation should a double dip recession occur.

Of course GDP is WAAAYYY down from July 2007 and unemployment is 9.7 with U6 around 17 percent.

Which matters more, the output gap, unemployment, or the stock market?

Business week chooses the stock market! Is this a case of know your customer? The unemployed are subscribers to BW.

Posted by: grooft | April 12, 2010 10:02 AM | Report abuse

@wrongfuldeath "A rising market on thin volume is not a good indicator of a healthy economy."

Absolutely correct. The Federal Reserve is giving away money to banks for free, and it is pushing up the stock market.

However, if Mr. Klein is willing to accept this mini stock bubble as proof that the economy has improved, surely he will be willing to accept that it has gotten suddenly worse when it inevitably takes a 20% drop later this year. (The only question from the WH is whether they can keep pumping until after Nov. 2.)

Posted by: staticvars | April 12, 2010 10:13 AM | Report abuse

"are happy times here again?"

happy times are always with us, even through difficulties.
it is important to remember, even in discussion of the economy, that there is always happiness.
try to look for happiness, even in times of suffering.

with all that said,
i hope the economy is getting better.
i think the general perception now, which matters as consumer i hear it on my little main that things are improving.

Posted by: jkaren | April 12, 2010 10:13 AM | Report abuse


You keep showing these graphs that have the color change when Obama became president. What would be much more illumunating would be if you showed the same data but had the different colors represent the party in control of congress. I know you would never do this because it would clearly show that the election of a democratically controlled congress coresponds directly to low job growth and soaring deficits.

Posted by: cummije5 | April 12, 2010 10:14 AM | Report abuse

In the minds of business reporters and certain economists recessions are about market cap and the direction of GDP. In the minds of people who actually work for a living, recessions tend to be about unemployment rates (or even employment-to-population ratio), real median income and household wealth. In addition, people who are not economists or business reporters tend to be more interested in actual levels rather than directions. So where a business reporter might crow about income growth, the average person might be more concerned about the fact that it will be 5-10 years before they're back in the same financial position they [thought they] were in three years ago.

Posted by: paul314 | April 12, 2010 10:18 AM | Report abuse

visionbrkr -- I think if you go back through the archives, you'll see a large number of posts on the bad job reports of the past year or so. And this post ends by linking to a pessimistic take on the economy!

Posted by: Ezra Klein | April 12, 2010 10:20 AM | Report abuse

In Jan 2009, most people would have predicted a very grim economic environment for April 2010. At that time, many feared a major depression and even economic collapse. For the last year or so we have become a planet of people fearing major social upheavals and end of the world scenarios, etc..

From that perspective, things are much better now than we had anticipated.

Posted by: Lomillialor | April 12, 2010 10:20 AM | Report abuse

You all may have a political reason to be overly optimistic. I have experienced a similar political fueled optimism on the economy during the Bush Administration.

Hopefully I have learned to follow facts better than I did then. Gas prices are going to rise rapidly very soon as the world wide "recovery" takes hold. Tax rates are going to rise very fast starting January of 2011 and in fact the growth in 2010 is largely the result of wealthy individuals claiming 2011 income in 2010 to avoid paying high taxes.

Finally, commerical real estate is a big problem for the national economy. Anyone who forgets this bubble that is popping has their head in the clouds.

Posted by: lancediverson | April 12, 2010 10:36 AM | Report abuse

According to data from the Bureau of Economic Analysis, inflation adjusted wages and salaries per capita fell from $18,931 to $18,429 from Feb09 to Feb10 (2005 dollars), a decline of 2.7%.

Full-time employment fell from 113,656,000 in March 2009 to 111,256,000 in March 2010 (this compares to an increase from 112,771,000 to 114,366,000 over the so-called jobless recovery from November 2001 to December 2003). Median weeks unemployed is at 20, and average weeks unemployed is at 31.2, and both are much higher than what we experienced during any recession since the late 1940s. This is all per BLS data.

The economy has not recovered so much as stabilized. Look at a chart of jobs from 2007-2010 - not the change per month, but the total number of jobs (I prefer looking at full-time jobs, but either full-time or total will do). It's clear that from a labor market perspective - which is what main street cares about - basically no recovery has taken place whatsoever.

While the bleeding has stopped, keep in mind there were about 10.4 million more full-time jobs in Nov 2007 than Mar 2010.

As for recent GDP growth, a quarter of +5.6% and then +3.0% is pathetic after such a severe downturn (for comparison, once the Bush recovery finally gained strength in 2003Q3, we had a quarter of +6.9% followed by a year of +3.1%, and after the severe 1982 recession Reagan presided over a +9.3% quarter and then +7.9% for the following year).

As for the stock market, it's still lower than it was 10 years ago, despite 10 years worth of inflation. Asset markets have gone from "oh no it's the end of the world" to "well, okay the world isn't ending but stocks still aren't worth as much as we thought they were 10 years ago".

That all being said, I will agree that if Obama was a Republican, the Larry Kudlow types would be singing his praises - which is one of the many reasons not to listen to Larry Kudlow and like-minded talking heads.

Posted by: justin84 | April 12, 2010 10:38 AM | Report abuse

"[I]f Obama was a Republican, the Larry Kudlow types would be singing his praises - which is one of the many reasons not to listen to Larry Kudlow and like-minded talking heads."


On another note, speaking as someone who desperately hopes it's true that we're recovering, I'm genuinely skeptical about Dorning's analysis.

People started to sour on the economy in late 2007--before jobs hit their peak, and before they started to decline. It took MUCH longer for people looking at economic measures to say "yep, there's a problem here, things are going downhill."

My instinct is to treat public opinion about the state of the economy the same way we treat people's self-assessments of their health. They provide an incredibly reliable general indication of how things are and where they're going in the immediate future.

It should be treated not as a subjective "feeling" of the body politic that needs to be justified or explained, but as an economic data point in its own right.

Posted by: theorajones1 | April 12, 2010 11:04 AM | Report abuse


point taken about Kevin's article which btw isn't 100% pessimistic (he mentions steady if unspectacular growth at the end) but I've always been under the impression that the economy was bottoming out in the end of the Bush years/beginning of Obama years. Does he deserve credit for keeping us from a horrible Depression, YES but he also gets blame for keeping us in the recession that I expect will continue. Adding 160k jobs (some of which are temp census jobs) does not make up for 8 million jobs lost that likely will never fully come back.

When i did go back to many of the posts there seems to be a tenet in many of them of "this is bad but it could have been a whole lot worse if we didn't do X." Kind of like trying to cushion the blow. To that end I still can't get past the thought process behind Biden telling the world that we won't go past 8% unemployment and how silly that was to make that prediction no matter how much he was pressed to guess. Politicians (especially ones as seasoned as he is) should be smarter than that. I guess that's why he's taking on a Dan Quayle like quality. It doesn't help Biden that his President is imminently smarter than he is something the last President has no issues with btw.

Posted by: visionbrkr | April 12, 2010 11:05 AM | Report abuse

"A Bloomberg national poll in March found that Americans, by an almost 2-to-1 margin, believe the economy has gotten worse rather than better during the past year. The Market begs to differ."

Well, unless the market is putting money in the average person's pocket, the market can beg to differ all it wants. Trying to take the average underemployed or unemployed person and tell them that the economy is improving--sorry you can't pay your electric bill--is a difficult proposition.

The more important metric is what the average person, who knows whether or not they have money or if their job is in danger of being cut, thinks about the economy. In a disagreement between the market and the average working joe, the average working joe wins.

BTW, @cummije5 comments about graph colors: while legislation has an effect on the economy (sometimes real, sometimes false), on the whole there just isn't a big lever in the Oval Office the president can pull to make the economy better. The Democrats didn't immediately sprinkle "bad economy mojo" on everything when they won majorities in 2006. Nor did Obama just find the "robust economy" switch hidden behind a secret panel in the Oval office. So whether presented as is, or if the colors reflected when the Democrats gained control of the house and senate (in which case 90% of the crashing economy happened under Democratic control), such graphs would still have to be taken with a grain of salt. There are no conclusions whatsoever to be drawn about causation, and very few to be drawn about meaningful correlation. It's just a chart.

Posted by: Kevin_Willis | April 12, 2010 11:19 AM | Report abuse

my belief is that if, somehow, we'd avoided a housing bubble, and if the bush administration had lived up to its promise to run a general fund break-even (that was the whole "lockbox" promise, after all), then instead of a mediocre boom and historic bust, we'd have had years of weak growth.

such as i anticipate now: insofar as there was a 2000s driver of growth, it was the unsustainable housing boom.

and i don't see any new driver of growth on the horizon, so i expect continuing slow growth and poor job creation....

Posted by: howard16 | April 12, 2010 11:27 AM | Report abuse

First thing that came to mind, echoes of Carville: "It's the unemployement, stupid!"

Posted by: guided | April 12, 2010 11:51 AM | Report abuse

Happy times indeed.

The economy isn't recovering as quickly as many would hope because either companies do not have the capital to expand or they are so unsure about the future of the current market that they are unwilling to spend the capital required to expand.

The tax and regulatory burdens on many of the companies competing in our markets are enormous, and these burdens are only going to increase as new regulations and tax-increasing legislation come down the line.

This is not promising news for our economy in the least, especially if our legislators actually legislate into law a VAT tax, and/or other regressive taxes that would effect all Americans, regardless of income(Not that I would agree that more people should not pay taxes, apparently 47% of Americans receive more in government benefits and refunds than they pay in taxes each year(I believe I am within this number-- I'd have to check my records, but I believe I received a greater "refund" from the IRS than what I paid into it)). It is rather unfortunate that our politicians are considering raising taxes to cover our entitlement obligations and the rising debt, as this does nothing to help ailing businesses create jobs.

We are already bankrupt as a country. If all our debt obligations came due this year, we would default, of this there is no doubt. With no policies to actually stimulate the economy on the near horizon, we can only pray that inflation doesn't swallow us whole.

The stimulus bills that were passed by Congress were no antidote to our economic crises. They slapped a band-aid on many public sector ailments across many States, allowing teachers and other public sector employees to keep their jobs, but these are one-time expenses that do nothing to produce private sector wealth and capital, which we need to actually create jobs.

Government is hardly great at doing anything with wealth but re-distributing and/or spending it. In order to stimulate the economy, we need to lower tax burdens and eliminate onerous regulations that do nothing but slow the growth of wealth and capital. A great example: Coming regulation of CO2 by the EPA. CO2 is not a pollutant, global climate change(global warming)is not happening at the rate which was predicted in the IPCC's 2007 report on climate change, and the regulatory burden placed on companies across the U.S. to comply with these new regulatory standards will cost tens if not hundreds of millions of dollars a year.

Posted by: OfConservativeMind | April 12, 2010 12:14 PM | Report abuse

OfConservMind : "We are already bankrupt as a country."

Yes, thanks to Reagan and the two Bushes, who together created over 82% of the entire national debt as of Jan 2009. And 4/5 of the debt since then is due to laws and policies and wars in place at the time Obama got elected. The other 1/5 is due to Obama's policies to fight the recession and unemployment, etc..

Your post is nothing but ideological, fatuous ranting. You don't even offer credible links to justify your so-called facts or radical opinions.

For example, the CBO said stimulus has created significant numbers of jobs. And here you are, a loudmouth armchair quarterback, pretending you are smarter than all those professionals who work at the CBO and who analyzed such issues very carefully in a bipartisan fashion.

Another example: it is now regarded by most scientists that the IPCC has UNDERestimated the negative effects and timeline of climate change, not overestimated them as you claim. Here's some links that discuss this, though I know facts aren't something conservatives are mindful of.

Posted by: Lomillialor | April 12, 2010 12:33 PM | Report abuse

Happy times are here again with President Barack Obama in the White House....though there are things that we disagree with him on, we are happy that we have such a decent and good President.

Posted by: gilbertpb40 | April 12, 2010 1:58 PM | Report abuse

ofconservativemind, you do understand that it was the absence of regulatory burden that contributed to the current unpleasantness?

more seriously, yes, it's true that there are regulatory burdens to unfettered capitalism, and they exist for good reason.

the current disinclination to invest is a perfectly rational response to an over-indebted consumer and an associated financial sector de-leveraging: when there isn't an obvious "r" on the face of it, we don't have to worry about, for example, the impact of zoning at the margin.

it is, however, worth pursuing a point of yours one step further: we have had a perfect test tube to compare economic approaches.

in 1993, while coming out of a recession, the clinton administration raised taxes at the high end while committing to paygo. conservatives predicted imminent recession, and sure enough, 8 years later after unprecedented growth, a recession finally happened.

and then, in 2001 and 2003, coming out of a recession and then a period of weak growth, the bush administration cut taxes and cut taxes again. growth nonetheless remained poor and largely driven by an unsustainable housing boom with spinoff benefits in the construction industry. job growth was poor throughout, and never met bush administration targets. and then we had a honkin' big recession, prompted in good measure, as i noted, by the regulatory failure that came with bush league economics.

now, this doesn't prove every time you raise taxes, it's a boom, and every time you cut taxes, it's poor growth; it should, however, call into question jejune assertions that the current economic difficulties are rooted in too-high taxes and too-much regulation.

Posted by: howard16 | April 12, 2010 3:17 PM | Report abuse

I am just a dumb old investor who stayed with my 401K after Mr. Obama's election. I didn't switch over to "safe" investments like bonds. I did not listen to the Rush Limbaughs and other know-it-all political mouths who were telling people to dump their stock after Mr. Obama was elected. I stayed the course and my wife followed my stupid advice. Since Mr. Obama's Inaguration on January 20, 2009 our 401Ks have gone up 75%. We are within 3,500 points of the DOW's all time high. So much for taking 8-10 years to recover. Go figure.

Posted by: jms3rd | April 12, 2010 4:43 PM | Report abuse

Need a job? With new Obama Health Care Plan, we are going to insure additional 33 Million people. There is going to be huge demand for Medical Assistants, Medical Billing, Medical Coding, Pharmacy Assistant & Pharmacy Technician across the nation. We can help you get a training during weekends and evenings and get a degree in few months. With the degree finding a job will be easy, contact for more information at this is your chance

Posted by: LygiaJobeth | April 13, 2010 7:14 AM | Report abuse

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