Is the Recession Really Over?

New research has found that unemployment has declined more sharply in post-recession America than it did in the "great recession" from December 2007 to June 2009. This study was conducted by two former Census Bureau officials, Gordon W. Green Jr. and John F. Coder. America has been plagued with chronic unemployment and a decreased standard of living since the recession. Coder and Green have concluded from their study that the two main forces that have led to reduced standard of living are "the number of people outside the labor force" has gone up and also "the hourly pay of employed people has failed to keep pace with inflation". This is a new phenomenon that America did not face during the recession. Green and Coder believe that the high rate and long period of unemployment explain the declining income post-recession. Some economists, like Henry Farber, (click here to take a look at his study) are doubtful that America is even recession-free. Data from this new study seems to give their claims some evidence. The study identified household factors that may contribute to the rising or falling of income like age, type of employment, household type and education. (For more information about the study, click here) The issues of income inequality and unemployment have been very contentious issues that are dominating American politics. President Obama's $447 billion Job's plan is set to begin debate in the Senate this week, with little chance to pass as an entire bill, but smaller parts seem promising.

President Obama has been fighting desperately to enact some change in the country when it comes to the issue of the declining American standard of living and unemployment but it has been proven extremely difficult due to the Republican-led House (click here to read an opinion about the opposition of the jobs bill). Because of the constitutional "checks and balances" against the President, it has been increasingly difficult to change the existing economic policy and enact a more liberal policy. The facts are plain and simple: Americans are continuing to suffer from prolonged unemployment, a reduced standard of living, and income inequality. To understand why unemployment has increased you need to understand the economic principal, "Society faces a short-term tradeoff between inflation and unemployment" Reducing inflation often times increases unemployment. It seems as if the American people are feeling the effects of a reduced inflation. Both unemployment and inflation are substantial issues, but you face a trade-off so you must pick which one you want to lower. Another relevant principal is "A Country's Standard of Living Depends on its Ability to Produce Goods and Services". If America wants to overcome this decline of standard of living, we have to focus on productivity. We need to export more than we import and regain our status as a powerful manufacturer. Because of the way our government is set up it is extremely difficult for any intensive policy to be enacted, but we can only hope that our government can come to some sort of compromise that will benefit the American people.

Click here to see the New York Times article by Robert Pear.