Business columns: The economic recovery that wasn’t

Robert Higgs
The Washington Times

Reports of the U.S. economy’s robust recovery are greatly exaggerated, said Robert Higgs. True, industrial production rose modestly in February, thanks to “the winter weather, which boosted mining and utility production by increasing energy demand,” rather than to any government stimulus program. But a more telling indicator of the economy’s health is in the numbers on personal income, which fell in 42 states last year.

Nationally, personal income stands at around $12.2 trillion, not far from its 2008 peak of $12.3 trillion. But wages and salaries fell to $5.2 trillion in the final quarter of 2009, well below the 2008 peak of $5.4 trillion. What has grown, though, are government transfers to individuals, which have risen 24 percent, to $2.1 trillion, in just two years. Such payments, including unemployment and welfare benefits, now constitute 17.5 percent of personal income, up from 14.2 percent in 2007. “This rapidly growing dependence on the dole does not suggest a healthy recovery.” Rather, it is evidence of a hollow recovery—“like a piñata with no candy inside.”