Beyond the headlines I have two favorite measurements of the health of the economy. The first is median hourly wage. The reason for this is pretty obvious; if the benefits of economic growth are shared broadly, we should see this figure go up rather than down. The second measurement I'm a fan of is the growth nonresidential fixed investment. In plain English, nonresidential fixed investment is the amount of stuff that's being bought to be used to do other productive stuff. Manufacturing equipment. Computers. Office buildings. That sort of thing. Here's a chart of nonresidential fixed investment through Q4 of last year:
In Q4 2009, NFI grew by 6.5% according to the BEA. The current estimate for Q1 2010 has NFI growth at 4.1%, which, while in positive territory, doesn't look like a number that shows we are headed for particularly rapid job growth. Combined with the continued doldrums in the housing market, this doesn't really look like a speedy recovery.
It's very depressing that no one in DC seems to be hopping up and down thinking that this is a problem. The Gagnon plan would do a lot to push private borrowing rates down. The fear is that this will just re-inflate the housing bubble, but banks all across the country are almost certainly looking for better ways to invest their money than in housing right now.