QE2 a success? Not quite.
The second round of federal stimulus made Americans poorer, not richer
Federal Reserve Chairman Ben Bernanke listens to a question during a speech to a meeting of the International Monetary Committee in Atlanta, Tuesday June 7, 2011. He's given no hint that the Federal Reserve might implement a third round of quantitative easing. The second one, was no success, writes guest blogger Stefan Karlsson.
John Bazemore / AP
Ryan Avent claims that QE2 was a big success. That is a really strange definition of success. Since August last year, the employment to population ratio has dropped from 58.5% to 58.4%. Meanwhile, real average weekly earnings are down more than 1%. That means that average labor income dropped 1.2%.
By contrast in the preceding 8 months (from December 2009 to August 2010), real average weekly earnings rose 1%, while the employment rate rose from 58.2% to 58.5%, implying an increase in average labor income of 1.5% Even if you instead use the November or January base of 58.5%, we're still talking about a 1% gain, compared to the drop of more than 1%.
While some on Wall Street have gained a lot from QE2, it should be clear that QE2 has only (apart from the many other side effects, that is) served to make most Americans poorer.
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