On the Economy
Here’s a picture out today from the BLS on the number of unemployed persons per job opening. Used to be seven; now it’s around four. If you think of the job search as musical chairs, there are a few more chairs out on the floor for when the music stops.*
But still not enough–as you can see, it was one-for-one back in late 2000–now there was a tight labor market…
*It was my old friend and former EPI colleague Jeff Wenger whom I first heard make this analogy with these data…Jeff, you out there somewhere?
As others have noted, conservatives who’d like to bash the President on the economy are having an awfully hard time right now, as the recovery proceeds apace. Too slowly apace, for sure, but no objective observer can miss that the trend is our friend and that even the job market, while still far too weak and with conspicuous downsides (intractable long-term unemployment), is improving.
So, they’re stuck with “yeah, things are getting better, but if we were in charge, they’d be even better!”
This, of course, is the flipside of a rap with which I’m intimately familiar: “sure, things are bad—but without our actions, they’d be even worse!”
Neither are convincing to most people, because most people don’t engage in the economist’s counterfactual: the path the economy would have taken absent your interventions. It’s the “compared-to-what” in the above statements.
Thing is, I know and believe, within confidence intervals, my counterfactual. It comes from tried and true modeling based on the historical relationships of how advanced economies respond to stimulus.
Or, if you don’t like that sort of thing, you can derive a counterfactual from simply projecting the course the economy was on before you did your policy thing, and compare that to the actual path of growth and jobs (you can see that approach here—see discussion around Table 3). [Note: the fresh-water economists, who continue to willfully ignore critical lessons of our past, deeply disdain the Keynesian multiplier models—but I haven’t heard their objections to this other, much less theoretical approach, as in Table 3 in the above doc.]
What I don’t get is their counterfactual. Other than unconvincingly waving hands, muttering how things should be better, how the EPA and OSHA rules are killing businesses, yada, yada—let’s see some analysis.
Gov Romney’s got real economists on his team. If he wants to make the case that things would be better if we followed his plan—which actually looks pretty Hoover’esque to me—explicitly anti-stimulus re jobs and liquidate the housing market—let’s see the model. True, most people won’t believe it anyway, but those of us familiar with counterfactual analysis would like to see if there’s anything there, or if this is just disgruntled smoke-blowing.
I’m not saying we–when I was with the admin–or the Federal Reserve got everything right by a long shot. But what I don’t see is anything approaching a coherent argument about how things would be better otherwise.
I thought Federal Reserve chair Ben Bernanke once again showed some mettle in these remarks to the Senate Budget Committee on the economic outlook. He’s not at all swept up in optimism about recent improvements—he’s particularly on point regarding continued weaknesses in the job market—and he clearly cites all the reasons to keep pressing on monetary stimulus.
One note on taxes, because this came up on Larry Kudlow’s show Tuesday night. Ben correctly warned, based on the same type of analysis I show here, that the fiscal drag from the tax increases under current law—full Bush sunset, AMT hits a lot more people—would be too much for a still weak economy to absorb in 2013.
As the WaPo put it:
…the Fed chief continued to stress that a sharp, immediate push to reduce the deficit could harm the recovery in the upcoming months. In January 2013, he pointed out, the George W. Bush tax cuts will expire, and the major spending cuts triggered by the Budget Control Act will take effect, absent any further action by Congress. As a result, “there will be sharp change in fiscal stance of the federal government. Without compensating action, it would indeed slow the recovery,” Bernanke told the committee members.
I think Bernanke knows he’s operating from a playbook where the Fed is the only game in town in terms of stimulus. The economy still needs a boost—he called the pace of recovery “frustratingly slow”—but he knows Congress will be MIA for the indefinite future, and that means little new fiscal stimulus will be forthcoming.
That doesn’t mean, as my buddy Larry K suggested, that Ben is some kind of supply-sider who believes any tax increase will tank the economy. He’s got perfectly legit street cred on the need for balanced deficit reduction, and he understands that new revenues will have to be part of that deal.
The issue here is, of course, timing, and the 2.5% of GDP fiscal drag in 2013 (Zandi’s number) embedded in current law is way too much for what will still be a recovering economy. The highend cuts should definitely expire on schedule, but the rest should be phased out as things improve.
So, as I’ve said before, nobody’s perfect, but Bernanke is doing great work. I like the aggressiveness, the creativity (the use of their balance sheet while their main tool–the benchmark interest rate–is bound by zero), the transparency and signalling, the clear-eyed assessment of the still-weak economy…I even like the neatly-trimmed beard.
All’s I’m saying Ben, is that if Perry comes after you, I’ve got your back.
I’ve always thought the national minimum wage is a lot more important than most people tend to think. By definition, it sets a floor on the low end of the job market, though to their credit, many states now set their minimums above the federal level of $7.25 (Washington state clocks in at a cool $9.04). So it’s a floor, not a ceiling.
Lots of low-wage workers and their families depend on it, and its long slide, as shown in the figure below, especially over the Reagan years, contributed to wage losses and working poverty for many who toil to this day in low-end services.
Of course, when someone raises the idea of a raise, you hear a huge outcry from some in the business lobby. Their generic argument is that the increase will lead to job losses among those low-wage workers affected by the higher wage level. Such workers, they say, will now be “priced out of the labor market.”
Yet, you hear the opposite from groups that represent low-wage workers interests, groups like the National Employment Law Project, or NELP (proud disclosure: I’m on their board).
Now, let’s just pause here for a second. The DC lobby that represents low-wage employers say they’re against the increase but not because it would raise labor costs and cut into profits, but because it’s bad for the workers themselves, who will suffer reduced hours and layoffs. But the workers’ groups say “Bring it on!”
Hmmm…who you gonna believe?
In fact, with all this state variation—and some international variation as well (the UK has seen quite sharp increases in its minimum wage since it was re-introduced in the late 1990s)—we’ve had the benefit of natural experiments, rare in economics, enabling econometricians to fight it out as to the job loss effects (here’s mine with the great John Schmitt from a few years back).
It’s a large, gnarly literature, but I think it’s fair to say that most objective parties come away thinking that the hysteria around the increase is overblown. It helps some low-wage workers, most of whom are adults, many of whom have kids. Some studies find small job loss effects, some none.
A much more interesting question, economically speaking, is why don’t we see the horrifics that opponents scream about? I mean, the textbook theory implies that a one penny increase in a market wage should lead to massive unemployment, and that, I can say with 100% confidence is not at all what we’ve seen.
In fact, there are numerous other channels through which the higher wage is absorbed:
–profits: to the extent that the increase is paid for out of profits, we shouldn’t expect job losses. And in an economy where profits have dazzled while paychecks have fizzled, that ain’t a bad thing.
–prices: some studies find that a small bit gets passed through to higher prices.
–productivity: to the extent that higher wages reduce turnover and vacancies, a higher minimum can partially pay for itself by squeezing out such inefficiencies. It’s not wishful thinking—some studies have found just that.
–reasonable rates: it matters what the level you raise it to, and historically, increases have affected less than 10% of the workforce, often even smaller shares. With relatively few in the “affected range” we wouldn’t expect to see large distortions.
–it’s stimulus! Minimum wage workers tend to spend the extra cash, so there’s more economic activity than otherwise would occur—btw, even under the redistributive scenario described under “profits” above, you’ll get this affect if low-wage workers consume more of their last dollar than those in the sky boxes.
Finally, I’ve got to partially give it up to Gov Mitt Romney as the dude has taken significant incoming from his rivals for advocating indexing the national minimum wage, as is already done in some of those states noted above, so it doesn’t lose value over time as prices rise. It’s an excellent idea in that a) you avoid the dips in the figure below—which shows the real value of the national minimum since 1960, and b) businesses know what to expect. I mean, after all, we index lots of stuff like this, including Social Security and EITC benefits.
Why just “partially” in terms of giving it up to Mitt? Again, look at the figure. We don’t want to index the national wage to such a historically low level.
So where should we set it? I need to do more research on the question of “affected range” as noted above, but given that a national campaign will take numerous years to gain traction, I suspect I’ll end up in the $9-$10 range, phasing it in starting a year or so down the road. That’s higher than the historical record as shown below, but of course, average wages have gone up considerably over these years and the divergence between the wage floor and the average is both a symptom and a cause of increased earnings inequality (a graph of the minimum wage compared to the average wage would trend downward; I’ll make that soon).
What’s that? I’m dreaming??!! I don’t think so. Surely there’s a minimum wage increase out there in our future. The sooner we get to work on it, the sooner that future arrives.
The CBO budget update from the other day makes a good, simple point, one ignored by the austerity merchants: if we try to get rid of the deficit too quickly, we will make the jobless situation worse.
The CBO estimates the path of the deficit if all the Bush tax cuts went bye-bye on schedule at the end of this year (current law baseline; the alternative minimum tax would also whack a lot more middle-income people). Taxes would go up and the deficit would go down. But the drag to the still-too-weak economy from the reduction in after-tax income would mean less buying power for a lot of families and that would send the unemployment rate back up past 9% in their model by 2013.
This is very unlikely to happen. The President plans to let the sun set on the highend tax cuts at the end of this year, while preserving those for households with incomes under $250K. The highend cuts represent about a quarter of the whole package and they target those who are less income constrained to start with, so I wouldn’t expect them to have anywhere near the effect of the full sunset.
The Bush tax cuts are the main driver of the medium term budget deficit and ultimately, they should all phase out. But we need to be mindful of the timing.
Mitt Romney got knocked about a bit today for saying that he is “not concerned about the very poor.” Not quite “let them eat cake” but sounds bad, right?
Actually, what he seems to have meant, if you look at the context, is that he believes the least-well-off are amply provided for by the safety net. He doesn’t worry about the rich, either—“they’re doing just fine.”
My first thought was: hey, I’m glad he recognizes the existence of and need for the safety net. My second thought was…um…he’s gonna shred it!
Though Gov Romney recognized that “…we have food stamps, we have Medicaid, we have housing vouchers…” he neglected to make the following four points:
1) his budget slashes, and I mean SLASHES, domestic spending outside of defense.
2) he’s endorsed Rep Paul Ryan’s budget (now the House Republican Budget) which gets two-thirds of its $4.5 trillion in cuts from low-income programs (and uses the cuts to pay for tax cuts for the wealthy).
3) the Gov’s own tax plan actually raises taxes on those in the bottom fifth of the income scale (by $160 per year; by getting rid of a refundable credit for poor kids and cutting the EITC relative to current policy)—while cutting taxes for the top 0.1% of households (avg inc: $8.3 million) by about $460K/year.
4) he’s said he wants to block grant these low income safety net programs–i.e., instead of the federal program, states run it based on an annual grant, a fixed amount that does not go up or down based on need–and that’s a great way to rip some big holes in the safety net.
On #1 and #2, see here. Remember those Ryan cuts I warned about above? Well, according to my CBPP colleagues Van de Water and Kogan:
Governor Romney’s budget proposals would require far deeper cuts in nondefense programs than the House-passed budget resolution authored by Budget Committee Chairman Paul Ryan: $94 billion to $219 billion deeper in 2016 and $303 billion to $819 billion deeper in 2021.”
Medicaid and the Children’s Health Insurance Program (CHIP) would face cumulative cuts of $946 billion through 2021. Repealing the coverage expansions of the 2010 health reform legislation, as Governor Romney has proposed, would achieve more than the necessary savings. But it would leave 34 million people uninsured who would have gained coverage under health reform.
Cuts in the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamp Program) would throw 10 million low-income people off the benefit rolls, cut benefits by thousands of dollars a year, or some combination of the two.
On #4, if you want to see what block granting does to safety net programs, exhibit one is TANF. My colleagues Donna Pavetti and Liz Schott point out that the program has become much less elastic to the business cycle. In fact, its block grant has been frozen for 15 years!
The figure compares its responsiveness in the Great Recession to that of SNAP (formerly ‘food stamps’), a national program (not a block grant) which remains quite countercyclical. But if Mitt block grants it, that will change.
It’s one thing—and it’s a good thing—to recognize the importance of the safety net in the economic lives of the poorest among us. But it’s quite another indeed to go after it the way Gov Romney does in his budget endorsements and proposals.
[The following puts together a bunch of stuff I've been posting about here at OTE over the past few months...it's time to start thinking about these ideas in terms of new models to replace the old, worn out ones...]
The trickle-down, deregulatory agenda—what I have called YOYO, or “you’re on your own” economics—presumes that the growth chain starts at the top of the wealth scale and “trickles down” to those at the middle and the bottom of that scale. Problem is, that’s not worked.
Here’s a better model. In the midst of the 1990s boom, which lifted the earnings and incomes of middle and low-wage workers much more so than the 1980s or 2000s cycles, Larry Mishel and I started talking about “wage-led demand growth.” We meant that a much better way to generate robust, lasting, and broadly shared growth is through an economically strengthened middle class.
At the most basic level, this growth model is a function of customers interacting with employers, business owners, and producers. A recent article by successful venture capitalist Nick Hanauer very compellingly describes this interaction:
I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.
That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.
How does this dynamic interaction show up in the macroeconomy? Economist Alan Krueger, currently serving as Chair of the President’s Council of Economic Advisers summarized these findings in a recent speech, in a section on the consequences of economic inequality.
Less robust (or debt-financed) consumption. Seventy percent of the US economy is accounted for by consumer spending, so if that part of GDP lags, economic growth slows. It is also the case that the propensity to consume out of current income is higher among lower-income households (i.e., compared to wealthier households, they’re more likely to spend than save their income).
Based on an estimate of these relative propensities and the large shift in the share of national income that accrued to the top 1 percent over the past few decades, Krueger calculates that aggregate consumption could be 5 percent higher in the absence of such large income shifts. Applying rules of thumb on the relationship between aggregate growth and jobs, and assuming both economic slack and that this income was not simply replacing demand elsewhere in the economy, this extra consumption growth could reduce unemployment by 1.75 percentage points, implying about 2.6 million more people with jobs.
[As consumption is 70% of GDP, and each point of GDP above trend reduces unemployment by half a point, this calculation is .7*.5*5%, or 1.75%.]
Krueger cites an important caveat about this type of calculation. In the face of stagnant earnings in the 2000s, many in the middle class borrowed to make up—or more than make up—the difference, in which case middle-class consumption did not fall as much as it would have absent this leverage. To point out that this method of improving middle class living standards is both unsustainable and extremely risky is an obvious understatement.
Inequality and longer term growth. Krueger also points to recent research showing that “in a society where income inequality is greater, political decisions are likely to result in policies that lead to less growth.” Economist Mancur Olson also hypothesized about this relationship decades ago.
As more income, wealth, and power is concentrated at the top of the income scale, narrow coalitions will form to influence policy decisions in ways less likely to promote overall, or middle-class, well-being, and more likely to favor those with disproportionate power and resources. In the current economics debate, we clearly see these dynamics in a tax code that bestows preferential treatment on those with large amounts of assets, like capital gains and stock dividends, relative to wage earners.
Trickle-down economics, inequality, and incomes. Another piece of evidence with implications for rebuilding a strong middle class comes from new work by economists Emmanuel Saez et al. As shown in the figures from their paper (see here), they use international evidence from a wide variety of advanced economies to examine two key links in the logic of the supply-side chain.
First, they look at the relationship between the top marginal income tax rate in these countries and the change in income inequality. They find a strong negative correlation: in countries like ours that cut the top marginal tax rate, income is a lot more skewed (and note that this refers to pretax income, so the result is not a direct function of the tax policy changes).
But the critical question for supply-side is whether these high-end marginal tax rate reductions lead to faster income growth (we’ve already seen that they lead to more income inequality). The bottom figure shows that they do not. Real per capita income growth across these countries is unrelated to the changes in tax rates.
The above points emphasize an economic rationale for a growth model more favorable to the middle class. More broadly shared growth would not only score higher on a fairness criterion; it would provide a more reliable and durable structure for overall growth itself. It is no accident, in this regard, that the era of heightened inequality coincides with the arrival and persistence of what I’ve called “the shampoo economy:” bubble, bust, repeat.
But our emphasis on growth should not crowd out that of fairness, and in this regard, some of the most important recent work in this area has stressed the relationship between inequality and mobility, the latter being the extent to which individuals’ and families’ economic positions change over the life cycles. Again, I will briefly summarize the relevant findings.
Economic mobility. Some policy makers, often in seeking to dismiss the inequality problem, argue that the US has enough income mobility to offset increased inequality. We may start out further apart, they argue, but we change places enough that it doesn’t matter. This argument fails, however, both in terms of logic and evidence. The existence of mobility cannot offset increased inequality; for that to occur, mobility itself must be accelerating. There is no evidence to support such acceleration and some new, high-quality work suggests a slight decline in the rate of mobility.
The US has considerably less income mobility than almost every other advanced economy. In particular, as stressed in a recent New York Times article, parental income is a stronger predictor of the success of grown children in the U.S. relative to other advanced nations—i.e., we have less intergenerational mobility than other nations.
Putting some of these themes together, I have hypothesized that there are causal linkages between inequality and immobility. To the extent that those who have lost income share in recent years suffer diminished access to the goods, services, and general living conditions that would enhance their mobility, we would expect to see economic results like those cited above.
Here, I’m thinking about everything from access to quality education, starting with pre-school (such early educational interventions have been shown to have lasting positive impacts), to public services, like decent libraries and parks, to health care, housing, and even the physical environment. The new research linking mobility and inequality may well find that as society grows ever more unequal, those falling behind are losing access to the ladders that used to help them climb over the mobility barriers they faced.
Hanauer’s feedback loop is key to this model. It’s not just that we need growth to reach the middle class. It’s that when it does, the growth is more durable. There’s room for a lot more research here, but this feels like the right economic model for the present and the future.
Update: Should have noted that David Madland of the Center for American Progress wrote an excellent piece on this topic and CAP is going to be doing more work on it in the near future (Krueger’s speech was at CAP, kicking off the project).
Here’s one reason we’re stuck in slow growth mode: the budget crunch among state and local governments.
The figure shows the yearly percentage point contribution to or subtraction from real GDP growth from the state and local sectors since the late 1980s. The trend bounces around but the recent cliff dive is evident. It’s also why we keep losing jobs in these sectors month after month.
Unlike the feds, states have to balance their budgets every year, which means they either raise taxes or cut services. They haven’t done much on the tax side, so they’ve been laying off teachers, cops, maintenance workers; practically every month over the past few years we’ve been adding private sector jobs and shedding public sector jobs.
In a very real sense, what you have here is a microcosm of austerity measures at work in cities and towns across the country. Moreover, this drag on growth is avoidable. One of the most successful parts of the Recovery Act was state fiscal relief, as those dollars went directly to preserving state and local jobs. The American Jobs Act proposed $35 billion to build on that progress, resources that would have prevented hundreds of thousands of ongoing layoffs. But it languishes in the dysfunctional Congress and we’re left with the fiscal drag you see in the figure.
Update: A commenter notes that this figure is a good argument against a balanced budget amendment. Amen. As I wrote around the time of that debate–and this bad idea hasn’t gone away–think of a recession as all the states piled in a boat together along with the federal government and the boat is taking on water. There’s really only one institution in that boat with bilge pump and that’s the feds. A BBA takes the pump away…then the boat sinks…
I don’t know if the President will say much about housing, but there are some important and potential helpful policy choices percolating in the background.
I’ve long held that of all the stuff on the White House’s “we-can’t-wait” list—things they can do to help the economy and jobs without going through that legislative death trap formerly known as Congress—housing policy is the one with the greatest potential to actually move the needle.
And the most helpful policy in housing is the reduction of mortgage principal for underwater homeowners. Research has clearly revealed that owing more than the value on your home is the strongest predictor of foreclosure, and housing finance analysts widely agree that principal reduction is the best medicine to avoid this outcome.
But what does any of this have to do with stuff we could actually do right now? Good question. The answer is that the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, could quickly reduce the principal on millions of home loans they own or insure, without going through Congress.
So, why haven’t they done so? Another fine question. First, you need to recall that Fan and Fred are 80% owned by the US gov’t right now, and FHFA, as conservator, wants to protect the taxpayer. That’s fine—we thank you, FHFA.
But—and news accounts have been getting this quite wrong—FHFA believes that loan forgiveness (principal reduction) would only save the taxpayers $20 billion while loan forbearance would save $24 billion (the latter modifies the loan, it does not reduce it).
In other words, the FHFA agrees that both types of loan adjustments would reduce defaults and thus reduce losses to taxpayers, with a slight advantage to forbearance, which, as I’ll argue in a moment, is very likely incorrect. I think if you did the analysis right, forgiveness would trump forbearance by a long shot. But given the fact that reduction would clean this mess up a whole lot faster and more reliably than just changing the terms of the loans, and that taxpayers save either way, the path ahead—toward forgiveness, not forbearance—should be clear.
Unfortunately, the FHFA is placing landmines in that path. Based on a letter reviewing all this by FHFA acting director Ed DeMarco, news accounts like this or this are reporting that if Fan and Fred were to reduce the principal on a subset of the mortgages they own or insure, it would cost taxpayers $100 billion.
This $100 billion (it’s actually $102bn), however, is a gross number—it is the losses to the agencies, and the taxpayers, from all the mortgage defaults that FHFA expects to occur if they neither forbear nor reduce principal. The relevant numbers, however, are the difference between the losses under a forbearance program ($78 billion), or a reduction program ($82 billion) and the cost of doing nothing.
The punch line, then, is that by their estimates, forgiveness saves the taxpayer $20 billion; forbearance, $24 billion.
But for a number of reasons, FHFA’s methods make forbearance look better than it really is. This is some weedy stuff, but it matters:
–they use a state level price index rather than a localized price level. This approach averages across cities with huge price drops and those with normal price declines, and thus reduces the number of the deeply underwater borrowers.* That in turn understates the impact of the policy most helpful to those borrowers: principal reduction.
–they use FICO credit scores and debt-to-income ratios at the time of loan origination rather than where those measures are today. Obviously, they’re worse today, so this makes the agencies’ book look better than it really is, and again, understates the benefits to principal reduction. In other words, the way they do it artificially lowers their expected default rate, and so the policy that’s most effective against defaults for those with lower FICOs and higher DTIs gets less credit than it should.
–they assume that all of their debt forgiven in their forbearance programs is repaid…100% of it. That’s not realistic and it significantly reduces the cost of this option. Simply building in a realistic default rate for debt that’s been pushed back to the end of the loan would raise the cost of forbearance relative to principal reduction.
Any one of these changes will sop up the $4 billion difference in an NY minute, showing forgiveness to dominate forbearance. But even if the FHFA wants to stick with their numbers, reductions will go to work much more quickly and effectively to prevent defaults.
If they keep coming up with reasons not to do the right thing, the White House should do the right thing and replace DeMarco—a perfect good guy who believes he’s doing the right thing here but isn’t—with someone who gets the urgency of the situation.
*Imagine a) that anyone with a home price decline of 30% is underwater and needs a loan mod, and b) a state has two homeowners in two different cities. Homeowner A’s price went up 30%, homeowner B’s price went down 30%. Average them together across the state and no one needs a mod; use the local price index, and B should get one.
I’ll try to get to some details later, but fourth quarter GDP just came out and the growth rate was 2.8%, slightly below expectations but an OK pop nevertheless.
Remember, the rule of thumb here—and while it doesn’t hold quarter-to-quarter, it’s pretty reliable year-to-year—is that for every point real GDP grows about the trend rate of 2.5%, the unemployment rate should come down about a half a percent. So a sustained growth rate close to 3% should shave one-quarter of a percentage point off of the jobless rate.
The question is sustainability. Headwinds persist—Europe (and the UK) pose growth and financial contagion risks, oil price spikes, and fading stimulus all come to mind, and the capacity of this Congress to self-inflict economic wounds is also hanging out there (failure to extend the UI and payroll tax cut, e.g., would definitely hurt near-term growth).
One notable data signal from the report is the growth rate of final sales, which excludes inventory buildups or drawdowns, and is thus considered a cleaner measure of actual real-time demand in the economy. Final sales grew only 0.8% last quarter, meaning inventory buildup was a big part of the topline number and suggesting that the real, underlying growth rate of the ongoing expansion is still too slow. It’s also worth noting that the economy expanded at a relatively sloggy rate of 1.6% over the year 2011.
So, have we hit escape velocity from the clutches of the Great Recession? I’d say no, not yet. We’re headed in the right direction, we’ve got some mo, but growth is too slow and there’s still too much fragility and slack in the system.