U.S. Still in a Depression

Does an official 6.3% unemployment rate mean that the economy has finally recovered?

No. Whether you call it the Great Recession or the depression it really is, the recovery that supposedly started in June 2009 has not been much of a recovery.

Here is an April 29, 2014 headline from Daily Kos, a hard left website: “Inflation-adjusted median household income down $4,309 since high point in 2008.”

Left and right should at least be able to agree upon this. For the average American, there has been no recovery at all. Median household income rises in a recovery, even if there is a lag. In this case, neither President Obama’s stimulus nor the Fed’s unprecedented new money printing have pulled household income back up. Indeed, there is much evidence that they prolonged the misery.

It gets worse. Today’s median household income, adjusted for inflation, is no higher than in 1988, at the end of the Reagan presidency. The middle class has in effect stood still for more than a quarter century.

It gets worse still. The government keeps moving the goalposts on inflation. Especially under Clinton, the method of calculating it changed, and of course changed in such a way that less inflation was reported. Today the Fed complains that it wants more inflation. But if inflation were calculated the old way, it would already be running at 5% a year.

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Hunter Lewis is co-founder of AgainstCronyCapitalism.org, co-founder and former CEO of Cambridge Associates, a global investment firm, and author of two recent books, Free Prices Now!, about the Federal Reserve, and Crony Capitalism in America 2008-12.