Jared Bernstein

A Day in the Life of Econo-Therapist

As a couples' therapist with a fledgling practice, imagine my surprise when I got a call from a high-profile couple claiming to desperately need my help. They tearfully acknowledged that their relationship was in trouble as they continue to talk past each other, with ever-escalating bouts of miscommunication.

I recognized the man's voice--it was our president. His partner, the American people, told me that like most couples, their problems came down to money. They said they needed a therapist who was sensitive, empathic, knowledgeable about recent economic trends, and had a really huge couch.

As usual, I kept careful case notes. As a public service, I present them below.

Me: Welcome, come in and have a seat. Mr. President, you sit over here, way to my right [a little private joke!]. American people, may I call you AP? And I notice there are fewer than the 300 million I was expecting.

AP: That's right. The top 5% didn't feel the need to join us. They don't think we have a problem.

President, chuckling: That's my base...wish I could join 'em!

AP, annoyed: He's very passive aggressive.

Me: Let's hold off on the recriminations and create a safe environment to explore our feelings. Who'd like to tell me what brings you here?

President: I'll start. I'm not getting any credit for the economy. We've just had the second best quarter for GDP growth in almost six years, unemployment is historically low at 4.6%, real per-capita income is up 10% over the recovery and we've added over five million jobs since 2003.

Most impressive of all, productivity is up 15% over my watch. You're an econo-therapist: tell them how that makes everybody better off. Because they just don't get it. For years now, I'm posting great numbers on the economy yet big negatives in the polls. Just a week ago, 61% thought the economy was poor or not so good. So tell those AP to acknowledge what I've done for them and stop whining!

Me: I'm not here to take sides. AP, can you explain why you're so negative, given the numbers we've just heard.

AP: That's easy. Most of what you just heard has little to do with how most of us are actually doing, because most of that growth has failed to reach us. We're glad GDP and productivity are up, but that doesn't mean much to us if our paychecks are still being squeezed.

He talks a lot about these big aggregate measures, like per capita income, but with inequality on the rise, measures that include CEOs along with the rest of us don't tell our story. He neglected to mention, for example, that the real earnings of the typical, or median, worker are down 2% over his great expansion, and the real non-supervisory wage is unchanged, despite tons of productivity growth. The income of the typical family fell every year, 2000-04 (2005 data come out next month), and poverty rose each year. We're 42% deeper in debt than we were five years ago, and our debt-service ratio (the percent of after-tax income that goes to pay off debts) is at an all-time high of 13.9%.

Meanwhile, the most recent inequality numbers show that in 2004, the bottom 90% got none of the growth, the top 1% was up 15%, and the tippy-top 0.01% was up 26%. That's where all that average growth is going. Like Paul Krugman said the other day, for too many of us, "economic growth is a spectator sport".

President: Leave Krugman out of this. They're always bringing him up.

Me: He's right, AP. You need to speak only for yourself. What about the job numbers? Don't those help you feel better about the economy?

AP: He's cherry-picking! Whenever he talks about job growth, he starts from mid-2003, conveniently ignoring the longest jobless recovery in history. Employment is up only 2% over the whole business cycle, compared to 10% for all other cycles that have lasted this long. If job growth over this cycle were comparable to the last one, we'd have seven million more jobs by now, or about 100,000 more per month.

And don't get me started on the low unemployment thing. He always leaves out the millions of us that left the job market or didn't even try to get a job because we didn't think there were enough decent opportunities. He knows the jobless rate only counts people actively looking for work. And anyway, if the job market were really that tight, we'd be seeing real wage gains and less inequality.

Me: What I hear you saying, AP, is that the president is ignoring the things that you care about most, the things affecting your pocketbooks and wallets everyday. Mr. President, can you tell the AP why you ignore the things that matter most to them?

President: GDP was up 5.6% in the first quarter! Capacity utilization's at 82%! We've added millions...

AP, cutting him off: You see. He never listens!

Me: Mr. President, AP is right, you're not hearing them.

President: I thought you didn't take sides.

Me: Whoops.

AP: I want a divorce.

Me: Good idea.

President: Hold on, there AP! Aren't you forgetting about the war on terror! Why grouse about the poverty rate when we're under siege by those who would destroy our way of life, who threaten to lethally strike at our fundamental...

AP, cutting him off again: That worked in '04. It won't work now. I'm starting divorce proceedings this November and plan to keep them going until November 2008.

Me: Well, that's all we have time for.

The author is a senior economist at the Economic Policy Institute and the author of the book "All Together Now: Common Sense for a Fair Economy."

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Posted at 9:03 AM, Jul 17, 2006 in Economy
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