30 January 2016
The End Of The Asset Boom
The Politics Of The Next Recession: How A Bust Could Impact The 2016 Elections
I cover demographic, social and economic trends around the world.
Opinions expressed by Forbes Contributors are their own.
In
this hyper-political age, perceptions about virtually everything from
the weather to the Academy Awards are shaped by ideology. No surprise
then that views on the economy and its trajectory also divide to a
certain extent along partisan lines.
How the public perceives the economy will have a major impact on this year’s elections. That most are already discouraged cannot be denied; the negative sentiment has propelled the rise of such seemingly marginal political figures as Donald Trump and Bernie Sanders. But will the economy prove a bother to the Democrats?
A lot depends on where you live and what you do. Much of the country is not doing so well; despite a strong two-year run in job creation, some 93 percent of U.S. counties still have not gained back all the jobs that they lost in the Great Recession, according to the National Association of Counties.
Yet many liberals believe the economy is shipshape. Paul Krugman, the progressive economist, hails the “Obama boom,” citing rising employment, some slight income gains and, at least until recently, a soaring stock market.
Krugman and others point to California, the epitome of true-blue
virtues, as having what one progressive journalist calls a simply “swell” economy. Rarely mentioned is the fact that, for the past two decades, the state’s economy has more often underperformed national averages.
How the public perceives the economy will have a major impact on this year’s elections. That most are already discouraged cannot be denied; the negative sentiment has propelled the rise of such seemingly marginal political figures as Donald Trump and Bernie Sanders. But will the economy prove a bother to the Democrats?
A lot depends on where you live and what you do. Much of the country is not doing so well; despite a strong two-year run in job creation, some 93 percent of U.S. counties still have not gained back all the jobs that they lost in the Great Recession, according to the National Association of Counties.
Yet many liberals believe the economy is shipshape. Paul Krugman, the progressive economist, hails the “Obama boom,” citing rising employment, some slight income gains and, at least until recently, a soaring stock market.
DES MOINES, IA – JANUARY 28: Republican
presidential candidate Donald Trump gestures as he speaks to veterans at
Drake University on January 28, 2016 in Des Moines, Iowa. (Photo by
Christopher Furlong/Getty Images)
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According to a recent United Way study, close to one in three is barely able to pay their bills.
A slowing economy and weak stock market, in contrast, does offer some solace to Republicans, who clearly see a political opportunity. Even at its best, this has been a slow growth recovery and while the official unemployment rate has improved sharply, labor participation rates remain depressed by historical standards. Millions of young people remain in their parent’s homes as opposed to engaging the economy, buying homes, and getting onto adulthood.
The End Of The Asset Boom
America may not be in as bad shape as Republicans and conservatives like to insist. Certainly compared to Europe or Japan, we’re in great shape. While some doubt weakness in China really poses a danger to the U.S. – exports account for only 13% of U.S. GDP, after all, and China is not one of the largest markets for U.S. goods — David Stockman, among others, argues that China’s slowdown is due to a dangerous phenomenon that is present in the U.S. as well: a disastrous level of debt.
Some Democratic economists like Larry Summers, as well as economic gurus such as Mohammed el-Erian, warn that we should at least prepare for the possibility of recession.
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