In the aftermath of the electoral blowout, a reminder: the Great Recession isn’t over. In fact, GDP growth was slower in 2013 than in 2012. Let’s go to the FRED data:
There’s dotted lines added at the end of 2012 to give you a sense that throughout 2013 the economy didn’t speed up. Even though we were another year into the “recovery” GDP growth slowed down a bit.
There’s a lot of reasons people haven’t discussed it this way. I saw a lot of people using year-over-year GDP growth for 2013, proclaiming it a major success. A problem with using that method for a single point is that it’s very sensitive to what is happening around the end points, and indeed the quarter before and after that data point featured negative or near zero growth. Averaging it out (or even doing year-over-year on a longer scale) shows a much worse story. Also much of the celebrated convergence between the two years was really the BEA finding more austerity in 2012. (I added a line going back to 2011 to show that the overall growth rate has been lower since then. According to David Beckworth, this is the point when fiscal tightening began.)
Other people were hoping that the Evans Rule and open-ended purchases could stabilize “expectations” of inflation regardless of underlying changes in economic activity (I was one of them), a process that didn’t happen. And yet others knew the sequestration was put into place and was unlikely to be moved, so might as well make lemonade out of the austerity.
And that’s overall growth. Wages are even uglier. (Note in an election meant to repudiate liberalism, minimum wage hikes passed with flying colors.) The Federal Reserve’s Survey of Consumer Finances is not a bomb-throwing document, but it’s hard not to read class war into their latest one. From 2010 to 2013, a year after the Recession ended until last year, median incomes fell:
When 45 percent of the electorate puts the economy as the top issue in exit polls, and the economy performs like it does here, it’s no wonder we’re having wave election after wave election of discontentment.