Casey Mulligan, the Chicago school economist who writes a regular column for the New York Times and maintains a blog, is nothing if not consistent. But he's moved on from arguing that financial crises rarely cause woe to Main Street, or predicting that the commercial real estate sector wouldn't crash. Now he's staking an even more ambitious claim: The disastrous year we've just lived through wasn't really a disaster.
Lehman failed in September 2008, and that started the panic that got the world's attention.
So a year later, in September 2009, after living through a year of "disaster," how did real consumption expenditure ... compare to what it was in September 2008?
What about real disposable personal incomes: the amount of income households have on hand to spend?
Both of these are HIGHER in September 2009 than they were a year earlier.
University of Wisconsin economist Menzie Chinn crunches the numbers and observes that if you break the data down down per capita "consumption [in the third quarter of 2009] is 0.3 percent (in log terms) below the level in 2008Q3." Maybe not quite a "disaster." But he asks the reasonable question, "But one wonders how much lower per capita consumption would have been in the absence of the actions undertaken by fiscal and monetary authorities around the world."
I have a different question to ask. How isolated must one be not to acknowledge, deep down in your bones, that for millions and millions of Americans the last year has been a disaster? My own state of California, which stands alone as one of the largest economies of the world, has an unemployment rate over 12 percent. I see this every day, even in the relatively insulated enclave of Berkeley. A neighbor is getting foreclosed out of a house he lived in for decades. The nearest pizza parlor just closed down. Restaurants almost always have open tables. The job market is tight or nonexistent for nearly everyone I know and that has resulted in a clampdown on spending, on a purely anecdotal basis, that is near universal. I've lived through a couple of decent-size recessions. This is undoubtedly the worst. Why argue with that?
To try to pick and choose statistics that deny this reality betrays a fundamental lack of connection with real lives in America. It's an impressive achievement.