Rana Foroohar (2013) provides the introduction for a collection of articles entitled Economy 2.0: A User’s Guide. In the introduction to this collection she describes the major issues facing the American economy, beginning with the financial crisis of 2008 and covering stocks, investments, real estate, and everything in between.
Blake Ellis examines the process of economic recovery and argues that there is reason for some optimism, despite the slow recovery following the financial crisis of 2008. He argues that despite some unexpected improvement, overall the economy has not recovered as quickly as it did in the 1960s, 1970s, and 1980s. Ellis divides his article into several sections and examines the impact of recovery on those respective sections. He notes that the likelihood of getting a job has improved since the crisis, but that unemployment is still high and has not returned to pre-crisis levels.
Unfortunately, though, those individuals who have been out of work the longest are still having the hardest time finding jobs. People are having to look to different fields for employment as compared to pre-crisis data; prior to the crisis, construction was booming, but now it isn’t. However, oil and gas are booming and have many job openings. This has affected how people are saving for their children’s college education, especially since graduate degrees aren’t necessarily giving job seekers the upper hand, though Ellis admits that having an education increases one’s likelihood of getting a job. Incomes in general have not recovered, leading to retirement-age individuals not retiring for fear of not having enough for retirement. Homeownership, according to Ellis, has dropped to record lows, despite home prices rebounding. He concludes that though recovery is occurring, it’s put a damper on many aspects of the economy.
Dan Kadlec examines stock returns and investment strategies. He echoes former Treasury secretary Larry Summers’ observations regarding economic distortions – namely increasing wealth inequality – that have significantly affected the middle class as a reason for many of the economic issues being faced by Americans. Slow growth has become the economic norm. Taking a more global approach to investment is one strategy Kadlec recommends, as well as sticking with shares in multinational companies like Coca Cola. Kadlec also examines rising bond yields and problems with traditional retirement plans such as 401(k)s and pensions. Unfortunately, despite efforts by industry providers and employers, it is likely people will have to work longer than ever before.
While the other authors thus far have touched on jobs, Bill Saporite delves deeper, reporting that more jobs growth is needed, especially in certain fields. While many jobs were admittedly lost during the last recession, the American job market is, in fact, though slowly, beginning to recover. Saporite asserts that as bad as things have been in the last few years, the hints of growth that have been identified thus far argue for better growth over the next 5-10 years. Saporite demonstrates that some industries, like education, health care, and business-related industries have more openings and are seeking individuals, while areas like government and manufacturing are stagnating. More employers are connecting with colleges to snap up recruits. Saporite also points to the influence of technology in the jobs dynamic, especially in regards to social media and computer-related industries. He indicates that the energy boom is not likely to lose steam and highlights specific areas of growth, stagnation, increases, and decreases in job markets.
Ellis and Kadlec both touched on the house market; Barbara Kiviat focuses on housing. She argues that housing is improving…IF one lives in the right place at the right time. She argues that price variances in home costs differ dramatically based on geography, pointing out gains in places like Miami, Los Angeles, and Phoenix. Furthermore, people seem to be doing a better job of keeping up with their mortgage payments. Two insets in the article offer tips on increasing one’s chances of getting a mortgage as well as comparing the relative pros and cons of buying a house versus renting. She concludes that things will improve, but she hopes that people have learned a lesson regarding the last housing bust.
Melanie Hicken takes a look at the global context of the economy – that is, how economic changes and forces around the globe affect America. She highlights how a decline in European product demand has contributed to China’s slowdown which, in turn, has influenced America, leading to slow growth. Hicken also focuses on the Federal Reserve’s role in global economics. Like Kadlec, Hicken also addresses issues with stocks and the Stock Market. In the face of these many interconnected elements Hicken advises playing it safe with one’s money.
The final article is by Rana Foroohar. Foroohar takes a look at Janet Yellen, the 15th chair of the Federal Reserve System and the first woman to hold the position. The article is essentially a biographical description of Yellen’s life, influences, policies, and intentions for her career as the Fed chair. She sees her point of view as “kitchen table economics,” making a connection between public policy and human suffering and how one can alleviate the other. Foroohar outlines what lies of Yellen in the current economic climate, from making crucial economic decisions to dealing with Beltway politics. Yellen intends for the Fed to be more active in ‘picking up the pieces’ of the crisis, as well as being proactive in seeking out hidden risk. Yellen believes in tighter regulation and higher standards in terms of industries and banking. According to Foroohar, Yellen will judge the health of the economy not by Wall Street but by Main Street, echoing Yellen’s early connection between public policy and daily human lives.