Economic Selfie Says Recovery on Fire, But Reality Murkier
The latest federal jobs numbers that reported the creation of more than 250,000 jobs in one month indicates the economy is on a fast rebound.
University of Central Florida economist Sean Snatih, however, says we shouldn’t fall for the economic “selfie” to tell us the whole story.
Snaith is referring to the social-media practice of posting an image you take of yourself on Facebook or other media channels. You post the photo that captures your best angle ignoring anything out of the frame that might tell you the real story of what is happening, Snaith said.
That’s exactly what media does when it picks up only one part of the economic recovery story, he said. While some of the recent jobs numbers are good, others are not so good, said Snaith, director of UCF’s Institute for Economic Competitiveness.
“So don’t fall for the selfie,” he said. “The selfie in many ways can be an act of deception, putting your best face forward, showing only the most flattering image possible of the taker using camera angles that obscure double chins or hide blemishes, choosing lighting that is most becoming, or masking other less-attractive qualities of the photographer. Too often it seems that we have been viewing the economic recovery that followed the Great Recession through a series of economic selfies and simply not seeing the complete picture of a recovery that has been the weakest since the Great Depression.”
In his latest economic forecast, Snaith notes that the economic recovery still has a long way to go before reaching pre-recession glory. And the clues are in the rest of the jobs numbers, if one looks outside the selfie frame.
For example, while the U.S. Labor Department’s latest jobs report showed that 288,000 new employees were added to business payrolls in April (the largest increase in payrolls since January 2012) it also had some darker news. The U.S. labor force in April declined by 806,000, the second-largest one-month contraction since October 2013 when it contracted by 848,000. Before that you must go back to June of 1981 to find a labor force contraction larger than the one this April. Keep in mind that June 1981 was one month before the second-worst recession since the Great Depression.
So while there is some good news for the recovery, it must be tempered with the rest of reality and not just the selfie, Snaith added.
For a complete look at Snaith’s forecast, click here.
Some highlights are:
- Slower export growth than expected holds down the U.S. real GDP growth.
- Economic policy uncertainty is a fog that is hindering hiring, business investment and economic growth.
- Only 113,000 more payroll jobs to go and we are back…to the same number of payroll jobs the U.S. economy had in January 2008.
- Real consumer spending is expected to grow an average of 3% during 2014-2017, while gradually accelerating over this period to 3.3% growth in 2017.
- The housing market continues its long-drawn-out recovery. The housing market should steadily improve through 2016. During 2014-2017 housing starts will rise from 1,013,560 in 2014 to 1,557,551 in 2017.
- Payroll employment growth remains sluggish. Absent of more robust economic growth, policy uncertainty will weigh on the private sector with firms still hesitant to hire new workers. Consequently, payrolls will only expand 1.7 percent in 2014 and 2015. Growth in 2016 is expected to slip to 1.6 percent before easing to 1.4 percent in 2017 as the Affordable Care Act is fully implemented.
- Unemployment rates are expected to very gradually fall to 6.0 percent in the 4th quarter of 2017. Underemployment (people who have given up looking for work or are working part-time because they can’t find full time work) remains a serious problem and currently stands at 12.3 percent.
Snaith is a national expert in economics, forecasting, market sizing and economic analysis who authors quarterly reports about the state of the economy. Bloomberg News has named Snaith as one of the country’s most accurate forecasters for his predictions about the Federal Reserve’s benchmark interest rate, the Federal Funds rate.
Snaith also is a member of several national forecasting panels, including The Wall Street Journal Economic Forecasting Survey, CNNMoney.com’s survey of leading economists, the Associated Press Economy Survey, the National Association of Business Economics Quarterly Outlook Survey Panel, the Federal Reserve Bank of Philadelphia’s Survey of Professional Forecasters, the Livingston Survey, Bloomberg U.S. Economic Indicator Survey, Reuters U.S. Economy Survey, and USA Today Economic Survey Panel.
The Institute for Economic Competitiveness strives to provide complete, accurate and timely national, state and regional forecasts and economic analyses. Through these analyses, the institute provides valuable resources to the public and private sectors for informed decision-making.