Is the US in a recession or not? That’s the big question that’s obsessed Washington this past week. But here’s maybe a better question: Who cares?
We should, of course, care deeply about the very real, rising economic hardship ordinary Americans are enduring right now. But in the face of this suffering, meta-debates about whether these conditions technically count as a recession or not seem exceedingly trifling. The fact is that whether or not there’s strong job growth, or however little the economy contracted in this or that quarter, Americans are having a tough time in an economy they keep being told is actually really strong.
In reality, poverty is on the rise. With inflation going up and federal support ending, households are suddenly finding it much harder to make ends meet. Since the wildly successful Child Tax Credit expired in December, nearly half of the parents who benefited from the program have reported struggling to afford to feed their families, and more than 60 percent say they can’t pay for basic necessities. Child poverty shot up just under 5 percentage points between December 2021 and January 2022, meaning 3.7 million more kids were suddenly thrown below the poverty line.
It’s not just households with kids: 54 percent of elderly single women and 45 percent of elderly single men either qualify as poor or don’t make enough to pay for the essentials. Just under two-thirds of Americans were living paycheck to paycheck by this past June, up 4 percentage points since a year earlier.
The sterling-sounding job and unemployment numbers may be useful for White House press releases, but they don’t tell the full story. Understanding the limits of these figures, which don’t factor in underemployment and poverty wages, the Ludwig Institute for Shared Economic Prosperity (LISEP) developed a different measure of unemployment that looks at how many workers want a full-time job but don’t have one, or earn less than a meager $20,000 a year before taxes. By those measures, the unemployment rate in June 2022 was a whopping 22.1 percent, more than six times greater than the 3.6 percent recorded by the Bureau of Labor Statistics that month.
Those that do have work, meanwhile, don’t earn nearly enough from it. News about rising wages often ignores that the cost of everything else is rising, too, and at a faster rate than workers’ pocketbooks can keep up with. One in three workers make less than $15 an hour, which is already worth quite a bit less than it did when the Fight for $15 campaign started ten years ago, while roughly 243,000 workers earn as little as the federal minimum wage, which has been stuck at the same puny level an ungodly thirteen years, and is today worth the least it has since sixty years ago.
Americans in turn are less and less able to afford the skyrocketing price of keeping a roof over their heads. This past May, the median asking rent for the whole of the United States cleared $2,000 a month for the first time in history after rising 14.8 percent over the previous year. This effectively means that only households making $80,000 a year are now paying rent that’s officially “affordable” by government standards. Even mobile homes have seen their rent shoot up, thanks to private equity firms and other investors buying up them up as cash cows.
As a result, the already bad US homelessness crisis is getting palpably worse. Shelters across the country are seeing their waitlists double and triple, with single mothers and even families with jobs more and more likely to ask for help. This isn’t just anecdotal evidence: cities and states all over the map are recording an uptick.
All the while, Americans are winding up deeper and deeper into debt to keep their heads above water. Household debt is on the rise, and 43 percent of Americans expect to sink further in the months ahead, most of it thanks to increasingly expensive mortgages, but much of it through credit cards. For many, it’s the only way they can pay off treatment for health and medical issues, which, coupled with the dysfunctional, corporate insurance-dominated US health care system that chugs along unreformed, has left one hundred million Americans with some form of health care debt today.
Any sane person would read all this and tell you that job numbers and GDP — which tells us only about the total wealth of a country in a system where those at the very top are taking massive shares of it for themselves — don’t give you a very full picture of this economy. But we’re back in familiar territory. For years, Barack Obama pointed to growth and job numbers while Americans’ incomes fell and they dropped out of the labor market. Then it was Donald Trump’s turn to boast about macro numbers that disguised how unevenly the spoils were shared. And now, it’s Joe Biden’s.
So by all means ask if the figures point to a recession or not. But whatever the answer, millions of people will still be sliding deeper into debt, struggling to pay their rent, and skipping meals to feed their kids. Better to ask instead, what can the government do about it?