According to the ever-strident popular press, the world is in recovery. The stock market says so, the bond market says so, and the politicians and monetary bureaucrats all say so.
The only trouble is the central banks continue to flood the world with liquidity, something they shouldn't need to be doing if a true recovery were really upon us.
One big piece of news this week is that the number of people employed in the US has finally exceeded its old high reached right before the financial crisis hit in early 2008:
Of course, there's a lot of poor data lurking beneath that rosy headline, mainly in the form of low-quality jobs that are not really comparable to the jobs lost in 2008. And millions more people are of working age now as compared to then, so the labor force participation rate is still in the tank — roughly 10 million new jobs would have to be created to soak all of those individuals up.
When we look at the total pool of unemployed, marginally attached and part-time (for economic reasons) workers, we see that as a percent of the total population that number is still higher than at any point in the last 20 years (although it's trending in the right direction):
The total wages and salaries of all working people was $6,532 billion in 2008, and at the end of 2013 it was $7,137 billion. While that ~$600 billion increase sounds good, the fact is it didn't even keep up with inflation.
So even though the same number of people are working now as in 2008, their effective purchasing power is less.
And, as we all know, the official rate of inflation is a lot lower than reality, so the situation is actually more troublesome than the above numbers suggest. My opinion is that the official rate of inflation (the CPI) is perhaps as much as 1% – 2% too low.
There's an interesting project being run out of MIT where they scan a billion prices from retailers by trolling the web for data, and they say that inflation is currently running 1% higher than the Bureau of Labor & Statistics (BLS) reports:
(Source)
While 1 percent may not sound like a lot, it is when it's being compounded over a long period of time.
by kennethpollinger 
