Is the U.S. economy as horrible as Donald Trump says it is?
Donald Trump sure paints a dire picture of the U.S. economy. In accepting the Republican party's nomination for the presidency on Thursday, he described a country burdened by searing poverty, downward mobility and crushing national debt.
The real estate mogul is hardly the first candidate gunning for the White House to spotlight the nation's economic problems to score political points. The difference with Trump is that his downbeat assessment is part of a broader -- and darker -- vision of America that describes crime-ridden streets, terrorism in our cities and other woes that, as he said in his acceptance speech in Cleveland, "threaten our very way of life."
How close does this grim picture match up with reality? It's a critical question, especially given that a core narrative in Trump's campaign is aimed at lower-income Americans who are struggling to get by. Here's what the evidence shows about how the economy is really faring.
Hiring. At 4.9 percent, the jobless rate is near what most economists technically call the "non-accelerating inflation rate of unemployment" -- in other words, the level below which wages and prices start to rise. That attests to the vigorous job growth since the economy collapsed in 2008. But the unemployment rate is only one gauge of the job market, and an incomplete one at that. The Federal Reserve's Labor Market Conditions Index, which factors in 19 different indicators, has fallen for six straight months, suggesting that employment growth is losing momentum. That could be because the economy is nearing full employment, which should lead to the kind of wage growth that puts more money in people's pockets; alternatively, that slowdown could suggest the U.S. is starting to cool, chilled by a broader decline in the global economy.
Layoffs. Far fewer Americans are filing for unemployment benefits these days -- in fact, the level of claims are at the lowest level since the early 1970s. Coupled with the decent job growth this year, along with data showing that more people are quitting their jobs because they're confident they can find a new one, the decline in layoffs is another sign the labor market remains in good shape.
Wages. Consumers account for nearly 70 percent of economic activity in the U.S., so how fast workers' pay is rising is among the most important benchmarks of economic performance. In June, median average annual wage growth reached 3.6 percent, up sharply from 1.6 percent when the economy was bottoming out in early 2010. Other measures suggest wage growth is less robust, but economists generally expect it to pick up in the second half of the year, driven by healthy employment gains.
Income. Trump's claim that median household income in the U.S. is $4,000 lower than in 2000 is misleading. Indeed, Americans have regained much of the financial ground they lost during the recession. The median annual household income (adjusted for inflation) as of June was $57,206, up 2.5 percent from last year's figure, according to an analysis of Census data by Sentier Research. What is true, by contrast, is that income growth during the recovery has been negligible. After hitting a low in 2011, family income is essentially at the same level as in December 2007 ($57,147), when the recession officially started; it's up a meager 2 percent since the downturn ended in June 2009 ($56,101). For most people, that feels like a treadmill.
Growth. During the recovery, gross domestic product -- the broadest measure of how the economy is doing -- has been stuck between 2 percent and 2.5 percent. That's not great. Historically, U.S. GDP growth has averaged around 3 percent, and at times it has surged above 4 percent, most recently during the 1990s technology boom. The reasons for the historically weak growth are complex and not fully understood, although many experts point to slowing productivity, a sign the economy is less dynamic than it was in past. Is there a way to turn things around? Yes, but that will likely require concerted fiscal and monetary policy action, a tall order when our political leaders are so divided.
Misery. The so-called Misery Index combines the nation's unemployment and inflation rates, rising as jobs vanish and prices spike. The index peaked in 1980, at 20.76, under President Jimmy Carter, as the country wrestled with both high unemployment and surging inflation. With inflation muted and the jobless rate low, the index today is at 5.4, below even where it stood when the economy was growing fast in the late '90s.
Poverty. As of the late 1950s, more than 22 percent of Americans lived in poverty. That figure declined to roughly 11 percent in 1973, as the government pumped billions of dollars into alleviating a range of economic and social ills. Since 1980, though, the poverty rate has been on the rise, and the five official U.S. recessions since then have only accelerated it. As of 2014, nearly 15 percent of Americans, or roughly 47 million people, lived below the poverty line. Children have it worse, with more than 1 in 5 living in poverty.
The data above suggest that the economy isn't as bleak as Trump maintains. But things also aren't as rosy as some of his Democratic critics contend. More important, these numbers don't tell the whole story, offering only an approximation of what life is like for those who have fallen through the statistical cracks or who, while drawing a paycheck, grapple with financial insecurity. Nor do they capture the corrosive economic toll of rising inequality in the U.S.
One recent trend that reveals the contours of this "other economy": For the first time in more than a century, millions of Americans have seen their life expectancy slip in recent years, largely because of a rise in suicides and substance abuse. The cause? A growing sense of despair, some experts think.
The economy may not be the abject failure Trump insists it is, but by some measures the picture certainly isn't pretty.