Ask Americans how the economy is doing, and their answer is stark: It is not just bad, it is run-for-the-hills terrible. Consumer confidence is at its lowest level in almost 30 years. Only 12 percent of Americans think the economy is in good shape. On the Internet, comparisons to the Great Depression are widespread.
But the reality is different. According to most broad measures of how the economy is doing, it’s not all that grim.
Soft? You betcha. In recession? Quite possibly. And a crisis in the financial markets has rattled nerves for months now. But so far, the economy is holding up better than it did during the last two recessions in 1990 and 2001. Employers haven’t shed as many jobs, the unemployment rate is still relatively low, and gross domestic product has kept rising. Things are nowhere near as bad as they were in the Great Depression, or even during the severe recession of 1982-83. The last time consumers were this miserable, in May 1980, the jobless rate was 7.5 percent and inflation was 14.4 percent. Now those numbers are 5.5 percent and 4.2 percent respectively.
This paradox has created a unique challenge for those guiding the economy, who worry that Americans’ pessimistic views will become a self-fulfilling prophecy. Two-thirds of the economy is consumer spending. So if people’s negative outlook leads them to cut their spending, a steeper downturn could happen.
I think that the unemployment figures are somewhat misleading for a couple of reasons. First of all, it does not reflect the situation of many people like a systems engineer friend of mine who was laid off and now is employed — as a baker, at a much lower salary. People who once had good paying jobs and now are employed, but for much less pay. That has put their homes and cars at risk, if they have not already lost them. And their friends who still have the good jobs are worried that they may be next. Nor do those figures reflect those unemployed who simply have given up hope are are out on the streets panhandling.
If the economy is doing OK dispite an adjustment in the cost of housing and increasing gas prices Obama can’t run on the economic failures of the Bush administration and McCain run on the failed policies of the past. Hence the lame stream media has bashed the economy (we are in a recession, the sky is falling, greatest number of forclosures etc. etc.) since we all know Bush could not possible have preside over a good economy!! If Obama is elected it will be blue skies again.
Sorry, I should have said, Obama can’t……… and against McCain for the failed policies of the past.
Do not look in the mirror Washington Post. You are the gloom and doom.
[blockquote] who worry that Americans’ pessimistic views will become a self-fulfilling prophecy [/blockquote]
Self-fulfilling? Wages of the lower and middle classes have not kept pace with inflation for many years, despite reportedly increased productivity. Why be surprised at pessimism?
When people regard boom times as normal, then normal times will seem like depressions.
#4 Amen. Americans are simply responding to the 24 hour a day liberal-biased media who has decided to sell us all on doom and gloom to make sure we’re in line for “change” in the next election.
Americans are simply heeded what they are told by the “responsible” 24 hour a day news agencies. A dearth of real news can really screw things up as they have to add drama and invent tragedy to keep people listening/watching/reading.
So sad…mrb
#5, You are right on! Mike Bertaut, the numbers speak for themselves, and they are becoming louder and louder: the middle class in the USA has been barely treading water for decades, and now an increasing number are going under. It’s been even more brutal for the working poor. Something like 40% of bankruptcy filings are due to health care costs. The gap between the wealthiest and the rest of us has never been larger in our nation’s history, and it’s getting worse.
These are not opinions; they are THE FACTS. The ‘conspiracy’ of a ‘liberal’ media has been dreamed up by conservative talk-show hosts to keep their ratings up! There’s a demographic in every audience that adores conspiracy theories, and the conservative talk-show hosts have been mining it successfully for many years.
In [url=http://jewishworldreview.com/cols/sowell112007.php3]this article[/url], Thomas Sowell has a good explanation of how the statistical facts can so easily lead to wrong conclusions on this topic.
Yes I agree, the top 10 % control a hugh amount of American wealth. The only problem is that 10% keeps changing. In 1899 there was an article in Harpers magazine about the folks to watch in the 20th century. None of those folks where blips on the radar by the mid 20th. 50 years ago no one knew who Bill Gates , Micheal Jordan, William Buffet , etc etc were. So yes the rich may keep getting richer but it is always a differant crowd of rich.
I ment Warren Buffet
#9, Don,
That’s one explanation, but it doesn’t fill out with analysis. For example, how many of the low-income filers were under 21 (high-school aged or entrant workers)? What is the trend he alludes to that shows that average Americans have improved their employment situations? Other statistics and anecdotal evidence gives credence to the reports indicating that for Americans jobs on average don’t pay as well or provide benefits previously offered – i.e. people are going home with less than they had or would have had predicated on past wages and benefits. Perhaps some of the pessimism is over the top, but it’s a reaction to experience, not merely propaganda.
#12 BlueOntario, the IRS statistics he talks about track individual filers aged 25 and above. Sowell’s main points are that (1) comparisons of households over time can be misleading because household composition changes, and (2) comparing income brackets (deciles, quintiles, quartiles, etc.) over time doesn’t tell us anything about what happens to actual people. A couple of years ago, the New York Times had a [url=http://www.nytimes.com/packages/html/national/20050515_CLASS_GRAPHIC/index_03.html]really interesting interactive graphic illustration[/url] of that phenomenon (hover your mouse over the 1988 quintiles to see where they ended up in 1998). I think that the people we really need to concern ourselves about are those who remain stuck at the bottom (about 1% of the population). But it’s important not to “solve” their problems in ways that make it more difficult for other people to improve their own lives and the lives of those around them.
An insider’s view from February’s Harper’s with a prediction that energy will be the next big thing: [url=http://www.harpers.org/archive/2008/02/0081908]The next bubble: Priming the markets for tomorrow’s big crash.[/url] Note that he doesn’t blame subprime lending itself, but instead sees the issues as untempered speculation on housing.
Housing prices never seemed out of hand in my neck of the woods but they’ve noticably gone up since the beginning of the year. I not sure if it’s a case of bad money from outside the area chasing good “bargains” here, or Johnny-come-lately’s here trying to mimic the Joneses of the hot markets.