MADELEINE BRAND, host:
And now on to worries about the U.S. economy or actually whether we should be worried at all. Even by conservative estimates, U.S. economy created two million more jobs last year than it lost. That statistic might surprise a lot of Americans nervous about the employment picture.
NPR's Mike Pesca has this report on why our perception of the economy often doesn't square with the actual numbers.
MIKE PESCA reporting:
Maybe you remember the Christmas before last, seeing all those stories about how rich Europeans were taking advantage of the weak American dollar by flying to New York on weekend buying jags? Rich Europeans, weak American dollar. Implication? How dare they? But even if you missed that one, you certainly heard all the talk about jobs and job loss. There's the pre-Copernican theory of the world being flat, and statements like this one are still reverberating.
Senator JOHN KERRY (Democrat, Massachusetts): President Bush is now certain to be the first President since Herbert Hoover in the Great Depression who didn't create a single new job.
PESCA: John Kerry would have been right, if he'd won. But since 2005, the economy has added at least two million jobs. The dollar has strengthened. Even oil, yes, oil has gotten a little cheaper lately. But more importantly, oil prices haven't affected the over all economy in a way that shocks most economists.
Things are looking up, or not. And maybe not for a good reason, says Charles Wheeler, an economist at the University of Chicago.
Mr. CHARLES WHEELER (Economist, University of Chicago): In aggregate, the numbers are actually quite respectable. But the fact is that it's not good for everybody. And there's certainly a lot of uncertainty, both among folks who don't have jobs, but also those who feel that they're at risk. And I think that's why you see this seeming divide between good news in the aggregate, and a lot of folks saying things just don't feel that great.
PESCA: Arnold Kling, formerly an economist with the Fed and later Freddie Mac, and author of Learning Economics, cites studies which show that the public tends to be more pessimistic than do economists.
Mr. ARNOLD KLING (Author, Learning Economics): One of the ways in which laymen are different is that they have what's called Make Work Bias. They fear that jobs will disappear. Economists believe that jobs can be created by the market, but typical lay people are much more worried about losing jobs.
PESCA: Princeton economist Alan Blinder, who was Vice Fed Chairman under President Clinton, says the statistics about the average worker don't comfort the below average worker or the non-worker. He says the fretful worker has a lot of justification in his uncertainty. Although Blinder also concedes maybe the average American is just plain wrong, just like they were in 1992.
Mr. ALAN BLINDER (Economist, Princeton University): The elder President Bush, when he ran for re-election in 1992, faced an electorate that thought the economy was horrible. But the truth is that the economy of 1992 was growing pretty strongly. But most Americans thought we were still in a recession and they felt bad about it.
PESCA: And Blinder says the media have not been helpful in clarifying today's jobs picture.
Mr. BLINDER: It makes a much better story to write about job loss and hardship than it does about job gains and normality, normalcy. Normalcy is boring.
PESCA: What makes a really boring story just may be the most important statistic in all of economics, at least according to Alan Blinder, Arnold Kling, and here Charles Wheeler.
Mr. WHEELER: In 2010 you took somebody out of a box and they wanted to know how the economy had done, and they were only allowed one figure. Productivity growth would be the one that they would look at.
PESCA: And productivity growth has been phenomenal for years. It's the engine of capitalism. It means the same amount of work yields better and better results, even if it yields worst headlines than plant closings and call centers in India.
If you want something to cheer, it's productivity, although last quarter productivity was down for the first time in five years. The new Fed Chairman predicted a turnaround. In a couple months, we'll know if there's really something to worry about. Which is to say, if for a change, our worries and our statistics sync up.
Mike Pesca, NPR News, New York.
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