What's the economic state of the Union?
The Union cannot be strong when the economy is weak. Our economic weakness is readily apparent. It’s apparent to those who have jobs and watch as the value of both their wages and assets decline. It’s apparent to the unemployed who struggle to find work.
The current economic malaise is the fourth time in the past century the U.S. experienced an extended period of weakness.
Each of these periods involved rapid increases in federal spending and control over the economy. In each instance, the power and influence of the federal government had to be rolled back before strong growth and higher living standards could resume.
In his State of the Union speech, President Obama not only failed to recognize the cause of the recent malaise — his plan is to increase the very policies that produced it.
Efficiency and jobs are the hallmarks of a strong economy. The U.S. economy has serious problems in both of these areas.
Increases in living standards depend on gains in efficiency or productivity. Long-term productivity growth in the U.S. has averaged 2 percent a year. This seemingly modest increase produces a doubling in living standards every generation.
Recent increases in productivity have fallen well below the long-term average. And productivity tends to grow faster than normal during the early stages of an economic recovery.
During the first three-and-a-half years of the current recovery, productivity gains averaged 1.5 percent a year. As a comparison, productivity growth averaged 3 percent a year during the first three-and-a-half years of recovery from the recession of 1981-82.
Even with the normal boost from a recovery, recent productivity has been below its longer-term average. Such a performance has serious consequences for future living standards.
Equally as serious for those seeking work is the trend in hours worked.
The U.S. Bureau of Labor Statistics reports there has been no increase in hours worked in the private non-farm business economy for the past 15 years.