January 27, 2014

The State of the President's Economy is Weak

Veronique de Rugy

George Gibbs Chair in Political Economy
Summary

If Americans have learned anything this year, it is that government often fails to deliver on the promises it makes and that its intervention into the economy can have serious negative consequences. Indeed, while the economy is recovering slowly, many have been left behind by a weak labor market. This has happened in spite of the many promises made by the administration about the powerful positive effects we would see from its stimulus spending and various interventions into the job market.

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If Americans have learned anything this year, it is that government often fails to deliver on the promises it makes and that its intervention into the economy can have serious negative consequences. Indeed, while the economy is recovering slowly, many have been left behind by a weak labor market. This has happened in spite of the many promises made by the administration about the powerful positive effects we would see from its stimulus spending and various interventions into the job market.

As a result of people giving up on looking for work, the labor force participation is at the lowest point since 1978. The share of employed in the economy has been strangely flat. And many of the lucky Americans who have found a job since the recovery started are underemployed. And while the official unemployment rate has dropped significantly in the last few years, a broader measure of unemployment has reached 13.1 percent.

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