It's understandable that Romney's painting a grim picture of the economy, but the numbers don't quite bear him out
The challenger will always try to talk down the economy. Even back in 1996, when jobs, growth, and even middle-class incomes were really taking off, candidate Bob Dole was trying to convince everyone that things were bad and getting worse.
It is, of course, a much closer call now, but still, I doubt that Gov. Romney’s assault on the recovery in last night’s debate resonated as much as he’d like it to. And I think Greg Sargent is right here: team Obama should continue to push back on this point, particularly regarding housing, which didn’t come up at all last night.
All three major home price indices are up and the 30-year mortgage rate is at an all-time low. This combination of home price appreciation and low rates has allowed more homeowners to refinance, lowering average annual mortgage payments by around $2,200. Housing starts got a big pop this AM, hitting their strongest stride since 2008, and while the monthly data are volatile, there are signs that the inventory overhang in housing is much diminished.
Last month, auto sales hit a four year high, with annualized sales just below 15 million, the highest sales count March 2008. Since GM and Chrysler have emerged from their government-structured bankruptcy, the industry’s added almost 250,000 jobs.
Unemployment, 10% three years ago, is 7.8%–still too high, but moving in the right direction. Mitt’s got a point re the depressed labor force participation rate, but he’s all stuff and malarkey if he really thinks that explains all, or even half, of the progress on unemployment. Employment growth accelerated notably in the third quarter of the year relative to the second (see first figure here). Still, despite the momentum, the jobless rate is too high to boost workers’ bargaining power and you can see that in paychecks.
Obviously we’re far from out of the woods, including housing. GDP’s growing barely at trend, unemployment’s still too high, and millions of foreclosures remain in the pipeline, though foreclosure filings are at the lowest level since July 2007, according to RealtyTrac.
So it’s a mixed bag, but nothing like the dark picture that Gov Romney and his supporters have been trying to paint. We’re slowly sailing out of a storm. Too slowly, IMHO, due to the refusal of policy makers other than Bernanke and Co., to put some policy-induced wind in the economy’s sails.
But I suspect there’s NCD—nontrivial cognitive dissonance–between Romney’s portrait of the economy and many people’s experience of it, especially around some of the more tangible aspects, like housing values and mortgage rates. When Sen Dole tried to convince people otherwise back in 1996, it was a huge loser for him. The timing isn’t nearly as supportive for the President, as he’s faced down a much deeper and more intractable recession, with the opposite of cooperation from Congress. But the truth is that things are slowly getting better and Romney’s claims to the contrary may be drowned out by this reality.
Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden. Follow his work via Twitter at @econjared and @centeronbudget. More Jared Bernstein.
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