We all know that the Great Recession took a huge toll on Americans’ finances. There’s little debate about that. But, the recovery is proving to be more contentious. For an example, look no further than this morning’s disappointing jobs report from the labor department. Let’s take a look at what’s going on with the U.S. economy and how it relates to your own financial bottom line.
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1. Unemployment is down and the GDP is up.
First, the good news – the unemployment rate is definitely improving. For the past two months, unemployment has been 5.1 percent, according to the Bureau of Labor Statistics. When compared with the peak of unemployment during the Great Recession, October of 2009 when the rate was 10 percent, our current figure of 5.1 percent is closer to the pre-recession numbers than we’ve seen in a long time. Similarly, the GDP is on the rise. Unemployment rate and GDP are certainly economic growth indicators, but most Americans might not be experiencing the financial benefits these current numbers suggest.
Despite the improved unemployment figures, the median household income currently stands at $54,000, which is about where it was a year ago after adjusting for inflation, and this is following two years of declines. Additionally, income levels are still falling for some demographic groups.
Furthermore, the real value of our wages is less than it was before the recession. The Real Wage Index, which measures the value of earnings against inflation, shows that the buying power of what we earn has decreased 8.4 percent since 2006.
3. The poverty rate in America hasn’t improved.
Earlier this month, the Census Bureau released the latest data on income and poverty in the United States. The poverty rate seems to be as stagnant as median household income. About 47 million Americans earn less than $24,000 a year, which means that almost 15 percent of US citizens are living in poverty. The numbers are even more startling when examining the breakdown by race. The current poverty rate is around 25 percent for black and Hispanic citizens. The only group to see significant gains in income was immigrants, whose median household income rose 4 percent to just under $50,000.
No one number can paint a total picture of the economy, but the fact is, more jobs haven’t meant less poverty. In order for our nation to truly recover from the Great Recession, there needs to be economic movement for those who lost the most during those years. Until median household income and poverty rates improve, it’s not fair, or safe, to say we’ve really recovered.
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