Tuesday, December 27, 2005

How is Our Economy Doing?

How is Our Economy Doing? What are the Key Factors?

"What's wrong with the economy?" by Economic Policy Instute (EPI) President Lawrence Mishel and Policy Director Ross Eisenbrey addresses these very questions. Hat tip to Brad DeLong via Max Sawicky.

Mishel and Eisenbrey sketch the highlights of a range of key factors. Taken collectively, these can help us formulate a picture in our mind -- one that lets us gauge just how well our economy is doing.

These factors include:

Inflation-adjusted hourly wages
Inflation-adjusted weekly wages
Corporate profits
Median household income (inflation-adjusted)
Indebtedness of U.S. households, after adjusting for inflation
The level of mortgage & consumer debt as a percent of after-tax income
The debt-service ratio (% of after-tax income that goes to pay off debts)
The personal savings rate
Number of private sector jobs
The number of manufacturing jobs
The unemployment rate
The percent of the population that has a job (employment rate)
The poverty rate and the number of people living in poverty
The child poverty rate and the number of children living in poverty
Family health care costs ($ per year)
The percent of people with employer-provided health insurance
The number of people with employer-provided health insurance

This is a wide-ranging list and the recent behavior of these factors (as spelled out in text form in the referenced article) is none too encouraging overall and some seem to indicate clearly disturbing trends.

This article is well on its way to meeting the multi-dimensionality principle espoused by this blog. It's actually quite unusual in text articles to have so many factors presented in such a brief space. The potential power of the Mishel-Eisenbrey message, however, suffers substantially from the lack of graphics.

Text messages (especially in paragraph form) simply are not an efficient method for transmitting an understanding of trend. This text approach almost invariably leads to some degree of cherry picking. Different factors use different time periods.

This type of detailed text discussion is close to impenetrable for all but the most dedicated readers and even those who "get it" will come away with an understanding of only a fragment of the trends at work.

EPI certainly knows how to put together trend graphics as evidenced by other work at their site. And they follow another key principle that guides this blog in making their data series available in their DataZone.

If they had included a downloadable slide show with at least one trend graph for each of their key factors, that would have increased the power of their mesage ten fold.

1 comment:

Anonymous said...

I believe that at the present time we are facing a series of problems concerning money, occupations etc. I think that the question, "How is Our Economy Doing?" Is avery good one. The answer for which I believe is "very badly".