Ezrati’s Economic Outlook: Consumer Better Off Than Most Seem to Think

Amid the country’s diverse economic problems, it is easy—too easy—to focus on the dark side of everything. However much material there is on that unattractive side of the ledger, people should not lose sight of positive developments. Especially where the American consumer is concerned, matters have improved markedly over the last four years, although they’re still far from universally robust. With consumption making up some 70% of the economy, the improvement raises serious doubts about today’s popular and sometimes extreme pessimism, especially the frequent forecasts of another recessionary dip.

To be sure, the poor jobs market raises all sorts of legitimate questions about the resilience of the consumer sector and consequently the entire cyclical recovery. As of June, the Labor Department reported that people on nonfarm payrolls totaled just 133 million. Though that’s a gain of over 4 million from the low during the 2008-2009 recession, the level still speaks to a subpar recovery in which net new jobs growth has averaged barely over 100,000 a month, not even one-third the average in a typical recovery. After more than three years of recovery, the economy remains some 5 million jobs short of its previous peak.