Long economic slog is hardest on the young

05/28/2014 6:40 PM

06/03/2014 10:17 AM

It is said that the problem with the younger generation — any younger generation — is that it has not read the minutes of the last meeting. Barack Obama, forever young, has convenient memory loss: It serves his ideology. His amnesia concerning the policies that produced the robust recovery from the more severe (measured by its 10.8 percent unemployment rate) recession of 1981-82 has produced policies that have resulted in 0.1 percent economic growth in 2014’s first quarter — the 56th, 57th and 58th months of the recovery from the recession that began in December 2007.

June begins the sixth year of the anemic recovery from the 18-month recession. Even if what Obama’s administration calls “historically severe” weather — aka, winter — reduced GDP growth by up to 1.4 percentage points, growth of 1.5 percent would still be grotesque.

America has a continental market, a reasonably educated and remarkably — considering the incentives for not working — industrious population, an increasingly (because of declining private-sector unionization) flexible labor market, an efficient financial system, extraordinary research universities to fuel innovation, and astonishing energy abundance. Yet the recovery’s two best growth years (2.5 percent in 2010 and 2.8 percent in 2012) are satisfactory only when compared to 2011 and 2013 (1.8 and 1.9, respectively).

The reason unemployment fell by four-tenths of a point (to 6.3 percent) in April while growth stalled is that 806,000 people left the labor force. The labor force participation rate fell by four-tenths of a point to a level reached in 1978, which was during the Carter-era stagflation and early in the surge of women into the workforce. There are about 14.5 million more Americans than before the recession but nearly 300,000 fewer jobs, and household income remains below the pre-recession peak.

Paul Volcker, whose nomination to be chairman of the Federal Reserve Board was Jimmy Carter’s best presidential decision, raised interest rates to put the nation through a recession to extinguish the inflation that, combined with stagnant growth, ruined Carter’s presidency. Then came the 1983-88 expansion, when growth averaged 4.6 percent, including five quarters over 7 percent.

Ronald Reagan lightened the weight of government as measured by taxation and regulation. Obama has done the opposite. According to the annual “snapshot of the federal regulatory state” compiled by Clyde Wayne Crews Jr. of the Competitive Enterprise Institute, four of the five largest yearly totals of pages in the Federal Register — the record of regulations — have occurred during the Obama administration.

The more than $1.1 trillion of student loan debt — the fastest-growing debt category, larger than credit card or auto loan debt — is restraining consumption, as is the retirement of baby boomers.

In April, the number of persons under 25 in the workforce declined by 484,000. Unsurprisingly, almost one in three (31 percent) persons 18 to 34 are living with their parents, including 25 percent who have jobs.

Investment in residential property is at the lowest level (as a share of the economy) since the World War II, Neil Irwin reports in The New York Times. “If,” Irwin writes, “building activity returned merely to its postwar average proportion of the economy, growth would jump this year to a booming, 1990s-like level of 4 percent.”

However, a Wall Street Journal headline announces that Washington has a plan: “U.S. Backs Off Tight Mortgage Rules.” It really is true: Life is not one damn thing after another, it is the same damn thing over and over.

There is, however, something new under the sun. The Pew Research Center reports that Americans 25 to 32 — “millennials” — constitute the first age cohort since World War II with higher unemployment or a greater portion living in poverty than their parents at this age. But today’s millennials have the consolation of having the president they wanted.

To reach George Will, send email to georgewill@washpost.com.

Videos

Join the Discussion

The Kansas City Star is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Terms of Service