Steven Rattner, a long-time Wall Street financier, led the restructuring of the auto industry in 2009 as counselor to the Treasury secretary under the Obama administration. His book “Overhaul: An Insider’s Account of the Obama Administration’s Emergency Rescue of the Auto Industry” was published in 2010. He is the chairman of Willett Advisors, the investment arm for Mayor Michael R. Bloomberg’s personal and philanthropic assets, and the economic analyst for MSNBC’s “Morning Joe.” Follow Steven Rattner at twitter.com/SteveRattnerSource: The New York Times
Although developments on the political front were certainly dispiriting, for the first time in years, the economic news was not all gloomy. But with the economy improving, there was less focus on the continuing need to address flagging incomes, rising inequality and unbalanced government spending. Below are 10 charts to illustrate the crosscurrents of the past year in economics and politics:
The Economy Picks Up Speed
By the end of 2014, even the most hardened cynics had to concede that the darkness that had pervaded the American economy since 2008 had lifted a bit. Most visibly, the rate of job growth accelerated, from 194,000 per month in 2013 to 241,000 per month in 2014. By May 2014, the total number of jobs had run past its previous peak in early 2008. Meanwhile, the overall economy began to expand at faster annual rates — 4.6 percent in the second quarter and a remarkable 5.0 percent in the third quarter.
Plunging Oil Prices
Sources: New York Mercantile Exchange; American Automobile Association
An
autumn collapse in oil prices brought more good news. A barrel of oil
that fetched $107 in June commanded only $55 by Dec. 22. For consumers,
that meant gasoline prices that fell to an average $2.38 per gallon,
compared with their peak of $3.70 in April. All told, the drop in oil
prices was equivalent to an annual tax cut of about $750 per American
family. And with the United States still importing an estimated 26
percent of its petroleum, lower prices raise the economy’s growth rate
and reduce the balance of payments deficit.
Wages Still Lag
Year-over-year percentage change in hourly earnings of all U.S. private workers.
Economic
news was not all positive. Most important, there were only hints that
stagnating wages might finally be turning upward. November figures
showed that the cash pay of hourly workers rose by a slender 0.8 percent
after adjustment for inflation over the previous year. The picture is
modestly better when cash benefits are added to the equation. In the
past two years, median family incomes, including items such as pensions,
Social Security
and unemployment insurance, edged up to about $53,500 from $52,600 in
2012. But they have remained well below their previous peak of $57,500
in January 2008. The decline between 2009 and 2012 was the first time
this inflation-adjusted measure had dropped during an economic recovery.
Inequality Gets Even Worse
Percent change in median family income, 2010-2013.
It’s Very Good at the Very Top
Percent of all income received by the top 1 percent and 0.01 percent of U.S. households.
Happily,
the problem of income inequality was brought front and center by the
publication of the economist Thomas Piketty’s landmark book, “Capital in
the 21st Century.” Originally written in French, weighing in at 696
pages and laden with incomprehensible equations, the book nonetheless
spent 22 weeks on the New York Times best-seller list, including three
weeks at the top. While Mr. Piketty’s solutions, such as a global wealth
tax, were mostly impractical or ill advised, his meticulous
identification of the problem was unassailable. By 2012, a mere 0.01
percent of American households — earning an average of $21.5 million
annually — commanded a near-record 4.1 percent of all income, compared
with 0.5 percent when income inequality hit its trough in 1973.
Government Does Little to Help
The U.S. ranks favorably in the Gini coefficient, a measure of inequality — until taxes and government transfers are factored in. Then, among these countries, it is the worst.
Obamacare Succeeds
Total who gained health insurance via Obamacare in 2014, in millions.
Source: ACASignups.net
A Bad Election for Democrats
The fates of ten key Democratic Senate candidates hewed
closely to the results that would be expected, statistically, by the
president’s low job approval.
It’s
hard to view the results of the 2014 midterm election as anything other
than a referendum on President Obama. In fact, a statistical analysis
of 10 key Senate races shows that the president’s low popularity ratings
explain about 65 percent of the vote shares achieved by these
individual Democratic candidates. In Arkansas, where President Obama’s
approval rating was only 34 percent, the incumbent, Mark Pryor, received
less than 40 percent of the vote. Weak candidates in states like
Kentucky and Louisiana underperformed their predicted vote share. Jeanne
Shaheen in New Hampshire and Mark Warner in Virginia benefited from the
president’s relatively high popularity (40 percent!) but still had to
outperform their expected shares to win re-election.
Polarization Vortex
The public is more ideologically divided now than it was two decades ago.
Source: Pew Research Center
Not
surprisingly, a new Pew study found that the American public continued
to grow more polarized, with both Democrats and Republicans moving
further into their ideological corners. Today, 94 percent of Democrats
are to the left of the median Republican, compared with 70 percent back
in 1994. Similarly, 92 percent of Republicans are to the right of the
typical Democrat, compared with 64 percent 20 years earlier. This is
reflected in a Congress that is also more polarized than it has been in
at least 100 years, as measured by the voting records of individual
legislators.
Congress of Little Consequence
The 112th and 113th Congresses were the least productive in many decades.
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