Three overarching facts illuminate the strange and troubling economic paradoxes for America from the terrible 2008 crash and its aftermath.
First: for U.S. financial and equity markets, there has already basically been a full recovery from the Great Recession. Key indicators of performance for these markets-the Dow30, S&P500, Russell 2000, NASDAQ, etc–are all at higher nominal levels today than they were five years ago. Even after controlling for inflation, these indicators are ahead of where they were in early 2008. For wealth holders in these markets, the nightmare is over-at least for now.
The story for the real economy-where tangible goods and services are actually created—is not nearly so happy, however. According to official estimates, inflation-adjusted GDP today (1Q2013) is roughly 3 percent above the pre-crash peak from late 2007. But since our national population has grown by about 5 percent over those same years, this means real per capita output in America is still distinctly below its level six years ago. And on its current track, this means it will be another year or more before per capita output fully returns to its pre-recession levels, to say nothing of registering any long-term growth. For our macro-economy, in short, we are looking at something now approaching a “lost decade.”
Then there is the labor market. There is no way to sugarcoat it: the situation here is basically a disaster, a crisis far worse than most commentators and policymakers seem to recognize, and with no clear prospects for appreciable improvement over the near-term horizon. Simply put, work in America has in large measure collapsed-and a recovery worthy of the name is nowhere in sight.