Every American Is Experiencing a Different Economy

You don't have a real economic recovery until the majority of Americans are participating — and right now they aren't

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Victor J. Blue / Bloomberg / Getty Images

Job seeker Julia Gilgurd, center, waits in line to enter a Choice Career Fair in New York City on July 18, 2012

When the economic statistics are reported each month, it’s easy to forget that they are just averages. Economic growth, unemployment, home prices and even inflation vary enormously from one place to another and from one part of the population to another. As a result, changes in the national numbers can create a false impression. The averages may be improving because some groups of Americans are faring a whole lot better, while other groups in the population may not be benefiting at all. But you can only determine the real trends if you consider the people who are being left out.

(MORE: U.S. Economy Adds Just 80,000 Jobs in June)

When the economy is humming along steadily, the variations are not so important. During a downturn, on the other hand, or in the early stages of an upturn, divergences become much greater. So today, whether you’re trying to assess the economy, anticipate the direction of the stock market or gauge the prospects of candidates in the November elections, you have to consider the individual economic situations of many different groups of people. There are lots of ways to divide up the U.S. population, of course, and some of them overlap. Here are the most important:

Wealth and Income
During the recent recession, net worth fell most sharply for middle-class families with incomes between $50,000 and $100,000. The reason is that home equity represents a disproportionately large percentage of their wealth. Moreover, home prices are actually slightly lower today than they were when the recovery began. By contrast, the stock market has gained about 50% since the economy began its slow recovery in 2009. That has greatly benefited Americans with six-figure family incomes, since they are more likely to have substantial investments in stocks and mutual funds. As a result, the most affluent families with substantial exposure to the stock market have been seeing a rebound for more than two years, while middle-class families that have most of their wealth in their homes are still in a depressed economy. So are lower-income families who have minimal assets and are more directly affected by unemployment, currently 8.2%, which has remained at recession levels since the recovery began. And here’s another wealth-related variation: as a general rule, groups with the lowest incomes and net worths feel changes in gasoline prices and food prices the most.

Education
Schooling is one of the most important determinants of unemployment. As of June, the unemployment rate among Americans 25 and older was 12.6% for those without a high school diploma, 8.4% for those with a high school diploma but no college, but only 4.1% for those with a college degree. Since the recovery began, unemployment has come down slightly for all three groups, but college graduates are operating in an economy where chronic unemployment is relatively rare — and that’s even truer for Americans with any kind of graduate or professional education. Those with college degrees, however, account for many of the families with incomes above $50,000, however, so their specific economic situations depend greatly on how much they are exposed to the real estate market vs. the stock market.

(MORE: The Average Canadian Is Now Richer than the Average American)

Age
As you might expect, wealth increases as people get older, and employment prospects also improve. The decline in net worth during the recession was greater than average, however, for those under the age of 44, and less than average for those over the age of 55. The unemployment rate as of June was nearly 24% for teenagers, nearly 14% for people in their early 20s, 8.2% for those 25 to 34, and below average for those 35 and up. Older Americans generally experience slightly higher rates of inflation, however, because of rising health care costs.

Race and Ethnicity
Adult unemployment rates are below average for whites and Asians, above average (11%) for Hispanics, and higher still for African Americans (14% plus). The wealth picture is similar. At the peak, non-Hispanic whites had three to six times the net worth of the rest of the population. And during the recession, the net worth of nonwhites and Hispanics fell further in percentage terms than that of non-Hispanic whites.

Geography
All economics is local, and income levels vary from one neighborhood to another. Housing markets are regional and many industries are too. The recession of the early 1970s took a heavy toll on the industrial Midwest, while the oil price decline in the 1980s hit Texas hard. Today states and local governments that are financially overextended are cutting government jobs, while those that are better managed have below-average unemployment. Housing markets that overbuilt — such as Florida and Nevada — are still deeply depressed, while prices for Manhattan apartments are relatively solid.

(MORE: Good News from the Construction Industry — but Will Housing Take Off?)

Describing the current economy as a recovery that is simply not progressing fast enough is a fundamental mistake. In reality, a minority of the U.S. population — typically the oldest and most affluent part — has been in a moderate recovery for more almost three years, while the majority remains thoroughly mired in recession. Those who have been left out are generally the poorest, the least well educated and the youngest.

It is probably always true that the most established and most competitive prosper first when the economy rebounds, while the most vulnerable benefit only with a lag. But the current economy is not generating new jobs fast enough to keep up with population growth and also to start broadening the recovery to the majority of the population. Until, say, two-thirds of the population feels the economic expansion, it is not just a disappointingly slow recovery — it is really no recovery at all.

MORE: Tax and Speed: How Lower Corporate Taxes and Infrastructure Can Save the Economy

14 comments
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M
M

In a world of finite resources  economies based on an unlimited growth delusion are bound to fail. 

WimFooo
WimFooo

America is run by the rich, for the rich! Corporate America and corrupt politicians are to blame!

Pro-Anon.tk

WimFooo
WimFooo

America is run by the rich, FOR the rich. Corporate America and corrupt politicians are to blame!   Dat-Privacy.tk

JamDooo
JamDooo

America is run by the rich, for the rich. Corporate America and corrupt politicians are to blame!

Anon-Fun.at.tc 

www.dai1ynews.blogspot.com
www.dai1ynews.blogspot.com

I bet the reason the unemployment rate is so low for young people w/ college is that they aren't being counted on the unemployment roles because they didn't have full-time jobs when they graduated from college; therefore, they can't file for unemployment and be tracked.By the way My friend gets more than $2500/Month  working few hours on his personal computer , to Read D Article (copy the link on my profile name)

DB80
DB80

You also need to consider underemployment.  Personally, I have two masters degrees and am in my early thirties, but I am only making $35,000 a year.  For the past ten years, I have had to accept positions that weren't well paid because my other option was to be unemployed and earn nothing. 

It is also important to note that older workers aren't as quick to retire these days, which makes it harder for the next generation to move up into those positions.  I believe the effect on my generation is disproportionately large.

L.Wilson Jr., M.B.A.
L.Wilson Jr., M.B.A.

Actually your other option was to be aggressive in starting your own business.

Tommy3134
Tommy3134

Well I tend to disagree. The social media is what is wrong with the country along with the cheapskate Walmart type employers. It will take unemployed people to take a stand, no different than the 40's to stand up and fight for wages and benefits.

Let me ask you this.... Is Walmart a Socialistic Employer? Has Walmart brought Socialism to this country dumbing down jobs and pay scales yada yada and anything you can add?

borisIII
borisIII

Its a conundrum to say Obama didn't fix the economic mess fast enough, because the Republicans party created it.

Fatesrider
Fatesrider

The Republican party also has done everything it can to stop any kind of reform or aid from passing.  Continuing its reputation as the Party of NO!!, they've offered no viable plans of their own.  Their single-minded determination to once again dominate the political scene at the expense of the rest of the country keeps them firmly entrenched and a threat to every American who wants a job and wants to get ahead.

Look at everything they've done since 1980.  EVERYTHING they've done has done NOTHING for the average American UNLESS it benefits the wealthy and the corporations.  Almost ALL of it hurt the average American far more than it helped them.

But Americans, being fundamentalist and stupid, believe in an trust these lying politicians just because they say they believe in the same mythological nonsense.  NO ONE should ever TRUST a POLITICIAN these days.  It's the millionaires on the left fighting their proxy battles in congress with the billionaires on the right and we, the average Americans, are caught in the middle trying to feed off the scraps they leave behind.  We don't get a say in who represents us.  We don't choose who will initially run.  The powers that be on the left and the right do.  We need a choice between the devils on the right and the deep, blue sea on the left.

If people want change, throw out everyone in Congress with a R or a D as part of their description and opt for I's.  Call it the new Declaration of Independence by voting for independents.  Let's get rid of the millionaires and the billionaires and put in Americans for a REAL change.

Tommy3134
Tommy3134

 And continue to convince society to do so!!! Especially the majority of voters blaming the educators, unions, your friends and neighbors.

vstillwell
vstillwell

I bet the reason the unemployment rate is so low for young people w/ college is that they aren't being counted on the unemployment roles because they didn't have full-time jobs when they graduated from college; therefore, they can't file for unemployment and be tracked.