The Economy: Why It Feels Even Worse

In late October, CNN's Ali Velshi and Erica Fink looked at five key measures of the economy to see how bad it really was. Now, they look again at the CNN "Real Feel Economic Index" and find it's tougher still.

As you've heard us and others report, the U.S. economy, more so than other worldwide economies, is dependent on spending decisions made by consumers. Consumer behavior drives spending habits, spending habits drive corporate profitability, and corporate profitability drives the stock market.

Success in the stock market is one of those things that make Americans feel better about the economy, along with increases in wages (not happening) and increases in home prices (also not happening).

Typically, we measure economic strength or weakness using the GDP, or Gross Domestic Product, which is historically thought of as the broadest measure of economic activity.

But, while GDP may be a good measure of the whole economy (and it may not be, but that's another story), it doesn't reflect all the things that matter to you.

In the fall, we took a look at five measures of the economy that reflect how things really are out there, to see if your fears and concerns are justified. The measures we chose are those that we "touch" on a daily basis.

We looked at how the economy is affecting you, via jobs, personal income, personal savings, industrial production, and home prices.

We charted them on a scale of 0-to-10: 0 being the worst that each of them has been since 1980; 10 being the best.

1980 was our starting point because experts agree that the economy before then was so different from what it is now that it would be like comparing apples and oranges.

Now, over a year into the recession, we're taking a look at it again.

We call it the CNN "Real Feel Economic Index."

Jobs

Many economists argue that, just to keep pace with the increase in the number of people able to work (new entrants to the workforce, minus those retiring), the U.S. needs to add a minimum of 100,000 jobs per month. America lost 598,000 jobs in January alone - starting the year off with the worst monthly decline in employment since December 1974.

Altogether, America has lost 3.6 million jobs since the start of the recession in December 2007.

And as President Obama signed the $787 billion recovery package into law, he did so against a backdrop of a rising unemployment rate, currently 7.6%.

To put that into perspective, consider that during the Great Depression, unemployment reached 24%.

When things are good, like they were in the tech boom, unemployment is low. Indeed, the lowest unemployment rate we've seen since 1980 was in April of 2000, when it stood at 3.8%.

When things are bad, as they are in a recession, unemployment is high. The highest unemployment rate since 1980 was 10.8%, in November 1982.

Putting everything on a 10-point scale, if you set 3.8% unemployment equal to ten (the absolute best on our timeline) and 10.8% unemployment equal to zero (the absolute worst), where are we now?

Jobs: 4.6

Personal Income

Simply having a job is a start, but if your wages don't keep pace with inflation, you "feel" that, too.

This generation is not making as much money as its fathers did, according to the Pew Charitable Trusts' Economic Mobility Project. Pew compared the income of men in their 30s to that of men in the same age group 30 years earlier. The organization figures this is a solid measure because the percentage of men in the work force has remained relatively steady over the last generation - unlike women, whose working numbers and wages have increased.

Pew found that, adjusted for inflation, salaries for men in their 30s went up five percent from 1964 to 1994. But looking at the period 1974 to 2004, salaries actually went down 12 percent, from $40,210 to $35,010 (in inflation-adjusted dollars).

In fact, income was actually on a bit of a downswing at the start of the 1980s but, again adjusted for inflation, was still higher than at any other point in recent history. In 1980, the average income for a man in his 30s was $39,109; today, Pew estimates it is $34,676.

If it's any consolation, the most recent numbers are not the low point in our survey; in 1993, the average man in his 30s was making $32,599 per year.

If an average income of $32,599 is set equal to zero, and $39,109 is set equal to ten, income today is at a relatively low point in the spectrum.

Personal Income: 3.2

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