Why are Americans down on the economy?

[PingSpike]

Text

Losing the American dream
The Dow is soaring, and the economy is growing. So why are so many Americans bearish? Fortune's Nina Easton looks at an economy where money is plentiful, but security scarce.
By Nina Easton, Fortune Washington bureau chief
July 19 2007: 5:45 AM EDT


WASHINGTON (Fortune) -- The Dow pops into uncharted 14,000-point territory. An economy pummeled by the 9/11 terrorist attacks has grown for 22 quarters straight. Unemployment stands at 4.5 percent - lower than any average decade from the 1960s through the 1990s. And Treasury Secretary Hank Paulson declares: "This is far and away the strongest global economy I've seen in my business lifetime."

So why do six out of ten Americans think that the economy was better five years ago and fear that worse economic times are on the horizon, according to the latest USA Today/Gallup poll? "If it makes you happy," moans Sheryl Crow, "then why the hell are you so sad?"


From opposite sides of the aisle, two Congressmen are quietly trying to take on the most volatile policy issue in Washington. Fortune's Nina Easton looks inside an unlikely partnership. (Read the column.)


This isn't new, but it is befuddling. The public has been blue about the economy for years, giving rise to an industry of blame-layers. Liberals predictably blame George Bush - for the war, for tax policies that favor the rich, for letting U.S. jobs go to China and India. Conservatives point the finger at the "liberal media establishment," which, they insist, put a shinier spin on the Bill Clinton bubble economy than on George Bush's recovery. And when all those explanations are exhausted, pundits like to blame Americans themselves - for being spoiled and soft and wanting too much.

But as new directions for the nation are being debated on the '08 presidential candidate trail, the question deserves a more thoughtful answer.

Democratic pollster Celinda Lake took a stab at it with a series of surveys that found only 18 percent of Americans believed they have obtained the "American dream." In a presentation last week at the Brookings Institution, she blamed concern over "the basics - health care, retirement, personal debt, paying the bills." She added: "People believe that corporations and wealthy interests have too much power and that they are putting up barriers...to working people achieving the American dream."

While there may some truth in this, it's a brand of class consciousness that hasn't exactly connected with voters in the past (though John Edwards is taking it out for a spin once again). As Jim Kessler, vice president for policy at the two-year-old think-tank Third Way, put it: From Walter Mondale and Michael Dukakis to Al Gore and John Kerry, Democrats "not only lost, but they lost to the middle class." Last year, in the 2006 congressional elections, Democrats won among middle-income voters for the first time since 1990.

As Third Way documents in its reports, the American middle class isn't really shrinking, so much as it is anxious. The median household income for workers aged 25 to 60 is nearly $62,000. If both spouses work, it's close to $82,000. As Kessler notes: "That is not an extravagant living. But it is not drowning. And it is not one step away from losing your home." The same Third Way report noted: "The bottom line is that the middle class is shrinking not because the bottom is dropping out; it is because more people are better off."

So why the jitters?

Lake hit on it, I believe, with this comment: "There have been times in our history when the American dream was rooted in opportunity, and there have been times in our history where the dream was rooted in security. This is a time, and has been for a couple for years now, where the dream is rooted in security."

There's not a lot of security in a fast-paced global economy where workers get ahead by chasing opportunities (not obediently following office rules), by constantly reinventing their careers (not relying on seniority), by self-investing their savings (not counting on company pensions).

In other words, in the new economy, we all have to be entrepreneurs with our own lives - with all the rewards and risks and, yes, anxieties that entails. According to Third Way, middle-aged men are staying at the same job nearly half as long as they were just 20 years ago, and more than 60 percent of workers report they've actually had to switch the type of work they are doing.

Add to all that a war in Iraq that America can't seem to win, and the always looming threat of another terrorist attack here at home, and it goes a long way toward explaining public unease.

The presidential candidates are already talking about building a stronger safety net for workers. But before buying into more calls for government spending, we should be debating what a 21st century safety net should look like.

As Rep. Jim McCrery, ranking Republican on the House Ways and Means Committee, notes: "We need to do something different. The old safety net we have in place is built for a time when people went to work for a company and stayed 30, 35 years, and then retired on a pension with defined benefits. The world has changed and we ought to look at new approaches to give workers in this country some feeling of security." And that's a conversation that doesn't have to rely on the same old partisan blame game.

I actually agree with a lot of what is in this article. The economy hasn't really ever been bad for me. I didn't have to easy of a time finding good paying work right when I got out of college in 2003, and have since changed my type of work. I'm making decent money and getting along ok so I can't complain, but I always feel unsettled.

The level of security part rings particularly true. It seems like my parents generation had things a lot easier. Or rather, the path to success was much more simple. I'm sure its mostly revisionist history, but it felt like before you could get in with a company, work hard and your job would be reasonably secure. If you went to college you got paid more.

Now, I find myself constantly developing an exist strategy just in case. Nothing is garenteed...there is no fairness to be had, and I only can count on myself to look out for me. My current company doesn't even seem like that...a lot of long tenure employees, good politics, and definately a place I could see myself staying along time. But I still can't shake those feelings.

And part of me feels like I was lied too. "Work hard and you'll be rewarded" "Go to college and you'll be better off" "Do what you love and you'll make enough money" Those ideas all seem like mostly bullshit to me. I suppose it didn't help I went for a degree in IT and got spilled out on the job market right after the dot-com bust. You can make it, its not like this is some third world country...but there isn't really room for rest anymore. No longer is the constant struggle just for those who wish to be extremely wealthy, its necessary for those you just want to succeed.

But to put things in perspective, I know things were a lot worse during some of the previous decades. The high interest rates of the 1980s, terrible periods of unemployments, 1970s gas crisis. I suppose I don't really have anything to complain about!

 

[WhipperSnapper]

Ms. Easton had some valid points. Economic security is definitely one of the reasons and it isn't all in people's head. The lack of a sense of economic security is a cost. It does have an affect on the quality of life. However, she also downplayed or ignored many of the economy's problems, especially the ones related to job and career loss in fields susceptible to global labor arbitrage.

I had a difficult time taking her seriously after she lauded the 4.5% unemployment rate, treating it as though it were a real indicator. Aside from not counting unemployed people who want a job but have been unemployed for too long or who became dejected and stopped searching for work, the unemployment numbers completely fail to take into account the issue of job quality. That is to say that there is a huge difference between a solid middle class job with benefits and a poverty-wage job. Thus, it's possible that with a 4.5% unemployment rate, 80% of the the people could employed or underemployed and working poverty wage jobs.

 

[heartsurgeon]

It's all about the leftist media trying to make Bush look bad......

they've try to convince the public that the sky is falling.

no credit ever, given to Bush tax cuts and the roaring economy and the sky high DOW.

I'm very pleased with the economy, and my personal financial situation. Never been better!

 

[Genx87]

I really believe a lot of the people have finally given into the media's constant doom and gloom regarding the economy. I agree, we have had growth in our economy for 4-5 years, unemployment has been ridiculously low for over 2 years now, and inflation has been left in check.

A constant barrage by the media, higher fuel prices, and an uncertain situation in the ME has left people with a bad taste in their mouth. If this was 1998, which our economy mimics a lot, people would have a much brighter outlook.

 

[PrinceofWands]

Originally posted by: WhipperSnapper

Ms. Easton had some valid points. Economic security is definitely one of the reasons and it isn't all in people's head. The lack of a sense of economic security is a cost. It does have an affect on the quality of life. However, she also downplayed or ignored many of the economy's problems, especially the ones related to job and career loss in fields susceptible to global labor arbitrage.

I had a difficult time taking her seriously after she lauded the 4.5% unemployment rate, treating it as though it were a real indicator. Aside from not counting unemployed people who want a job but have been unemployed for too long or who became dejected and stopped searching for work, the unemployment numbers completely fail to take into account the issue of job quality. That is to say that there is a huge difference between a solid middle class job with benefits and a poverty-wage job. Thus, it's possible that with a 4.5% unemployment rate, 80% of the the people could employed or underemployed and working poverty wage jobs.

In my opinion that's one of the biggest factors. The high middle-class and up are doing better than ever, but everyone else is falling through the crapper floor because good jobs are all but gone and everyone is left with barely better than minimum wage service industry work with no benefits.

 

[Mxylplyx]

Originally posted by: Genx87
I really believe a lot of the people have finally given into the media's constant doom and gloom regarding the economy. I agree, we have had growth in our economy for 4-5 years, unemployment has been ridiculously low for over 2 years now, and inflation has been left in check.

A constant barrage by the media, higher fuel prices, and an uncertain situation in the ME has left people with a bad taste in their mouth. If this was 1998, which our economy mimics a lot, people would have a much brighter outlook.

I have to agree. I graduated college in 2002, and I'm doing great. Currently working 2 professional jobs raking in tons of cash. However, I believe things are not nearly as easy if you are an uneducated worker in this country. With the rise of a true global economy, and the influx of illegal immigrants, unskilled work just wont get you by anymore. Some measures probably do need to be taken to kick the illegals out, and start imposing tariffs on countries that undervalue their currency or ravage their local environments. We shoot ourselves in the foot if we enact these tough environmental regulations, and then freely buy products from other countries that dont do the same. Doing these things will no doubt increase the prices of various consumer goods and services, but thats a price I'd be willing to pay for the long term economic security of this country. I have no doubt in my mind that a media bias exists against the current economy.

This economy is just as good if not better than the Clinton economy, yet the media isnt heaping praise on Bush like they did Clinton. Journalists are like 90% self described liberals...so what do you expect?

 

[Bowfinger]

Originally posted by: heartsurgeon
It's all about the leftist media trying to make Bush look bad......

There goes your credibility right off the bat. You might try leading with something other than a lame partisan propaganda point.

they've try to convince the public that the sky is falling.

For example, by obediently repeating the BushCo TERROR!!!!!!!!!!!! boogeyman without any fact-checking or critical analysis? Like that?

The Bush faithful are just pouting because the corporate media are finally starting to report both sides of the story instead of blindly reporting BushCo propaganda as fact.

no credit ever, given to Bush tax cuts and the roaring economy and the sky high DOW.

1. You cannot demonstrate any causal connection between the Bush tax loans and the current state of the economy.
2. The economy is much better than it was, but it is hardly roaring. There are numerous red and yellow flags when one moves beyond the Pollyanna cheerleading.
3. When adjusted for inflation, the Dow has just finally, in the last few weeks, recovered back to its previous high. Calling it "sky high" is more Pollyanna cheerleading.

I'm very pleased with the economy, and my personal financial situation. Never been better!

Good news for you. Irrelevant to a discussion of the overall economy and 300 million Americans. I'm doing great as well, but I'm not so self-centered as to think everyone is as fortunate as I am.

 

[Bowfinger]

Originally posted by: WhipperSnapper

Ms. Easton had some valid points. Economic security is definitely one of the reasons and it isn't all in people's head. The lack of a sense of economic security is a cost. It does have an affect on the quality of life. However, she also downplayed or ignored many of the economy's problems, especially the ones related to job and career loss in fields susceptible to global labor arbitrage.

I had a difficult time taking her seriously after she lauded the 4.5% unemployment rate, treating it as though it were a real indicator. Aside from not counting unemployed people who want a job but have been unemployed for too long or who became dejected and stopped searching for work, the unemployment numbers completely fail to take into account the issue of job quality. That is to say that there is a huge difference between a solid middle class job with benefits and a poverty-wage job. Thus, it's possible that with a 4.5% unemployment rate, 80% of the the people could employed or underemployed and working poverty wage jobs.

Exactly. That's been documented here over and over, yet the true believers continue to tout "ridiculously low" unemployment as if it is meaningful.

 

[CPA]

Because most people don't have a clue about the economy other than the doom and gloom they hear on the 6 o'clock news.

 

[ProfJohn]

Originally posted by: PrinceofWands
In my opinion that's one of the biggest factors. The high middle-class and up are doing better than ever, but everyone else is falling through the crapper floor because good jobs are all but gone and everyone is left with barely better than minimum wage service industry work with no benefits.

That is such a bogus excuse.

Did you notice that no one seemed to use that excuse when Clinton was in office and we had the greatest economy ever?
But if you look at the data you will see that by nearly every measure the economy is as good today as it was at any time during the Clinton administration, excluding the tail end of the dot com boom.

Proof:
Race and Hispanic Origin of People by Median Income
Median income for males in 2005 was $31,275 which is higher than all but the last three years of the Clinton Presidency.

Historical Poverty Tables
Poverty rate for all people is 12.6% which is lower than every year of the Clinton Presidency but the last two.
12.6 is also lower than EVERY year from 1980 to 1998.

Homeownership Rates for the U.S.
Home ownership rates for 2006 were between 68.5 and 69%.
In 2000 the rates were between 67.1 and 67.7
In 1990 the rates were between 63.7 and 64.1
If everyone is making minimum wage how come home ownership is near it's highest level ever?

 

[LegendKiller]

Originally posted by: CPA
Because most people don't have a clue about the economy other than the doom and gloom they hear on the 6 o'clock news.

Yeah, I work at the 5th largest bank in the world and underwrite hundreds of millions in securitization conduits while reading reams of economic research. I don't think this economy will last, so I guess all I do is hear the 6 o'clock news.

Nice try sparky.

 

[zephyrprime]

Here is why people feel bad about the economy:

A generation ago, American men in their thirties had median annual incomes of about $40,000 compared with men of the same age who now make about $35,000 a year, adjusted for inflation. That?s a 12.5 percent drop between 1974 and 2004, according to the report from the Pew Charitable Trusts? Economic Mobility Project.

This is despite a 100% increase in inflation adjusted gdp per capita during the same time.

 

[PrinceofWands]

Originally posted by: ProfJohn

Originally posted by: PrinceofWands
In my opinion that's one of the biggest factors. The high middle-class and up are doing better than ever, but everyone else is falling through the crapper floor because good jobs are all but gone and everyone is left with barely better than minimum wage service industry work with no benefits.

That is such a bogus excuse.

Did you notice that no one seemed to use that excuse when Clinton was in office and we had the greatest economy ever?
But if you look at the data you will see that by nearly every measure the economy is as good today as it was at any time during the Clinton administration, excluding the tail end of the dot com boom.

Proof:
Race and Hispanic Origin of People by Median Income
Median income for males in 2005 was $31,275 which is higher than all but the last three years of the Clinton Presidency.

Historical Poverty Tables
Poverty rate for all people is 12.6% which is lower than every year of the Clinton Presidency but the last two.
12.6 is also lower than EVERY year from 1980 to 1998.

Homeownership Rates for the U.S.
Home ownership rates for 2006 were between 68.5 and 69%.
In 2000 the rates were between 67.1 and 67.7
In 1990 the rates were between 63.7 and 64.1
If everyone is making minimum wage how come home ownership is near it's highest level ever?

I don't know what clinton has to do with anything. This shift to service industry has been going for decades now...since before clinton. The only difference was the tech boom that replaced industrial and manufacturing for a short time. Now that it's been offshored it's back to craptastic as usual.

The only way I can see more people being able to afford houses now as opposed to before (especially at the ridiculously inflated prices of real estate today) is that people are able and willing to take on more debt now...and possibly the advent of other mortgage options. But that's only a guess, I have no real idea or data. I only know what I see and read and hear...and that's pretty much unanimously bad, except for persons in management, or upper echelon business types.

 

[Mxylplyx]

Originally posted by: PrinceofWands

Originally posted by: ProfJohn

Originally posted by: PrinceofWands
In my opinion that's one of the biggest factors. The high middle-class and up are doing better than ever, but everyone else is falling through the crapper floor because good jobs are all but gone and everyone is left with barely better than minimum wage service industry work with no benefits.

That is such a bogus excuse.

Did you notice that no one seemed to use that excuse when Clinton was in office and we had the greatest economy ever?
But if you look at the data you will see that by nearly every measure the economy is as good today as it was at any time during the Clinton administration, excluding the tail end of the dot com boom.

Proof:
Race and Hispanic Origin of People by Median Income
Median income for males in 2005 was $31,275 which is higher than all but the last three years of the Clinton Presidency.

Historical Poverty Tables
Poverty rate for all people is 12.6% which is lower than every year of the Clinton Presidency but the last two.
12.6 is also lower than EVERY year from 1980 to 1998.

Homeownership Rates for the U.S.
Home ownership rates for 2006 were between 68.5 and 69%.
In 2000 the rates were between 67.1 and 67.7
In 1990 the rates were between 63.7 and 64.1
If everyone is making minimum wage how come home ownership is near it's highest level ever?

I don't know what clinton has to do with anything. This shift to service industry has been going for decades now...since before clinton. The only difference was the tech boom that replaced industrial and manufacturing for a short time. Now that it's been offshored it's back to craptastic as usual.

The only way I can see more people being able to afford houses now as opposed to before (especially at the ridiculously inflated prices of real estate today) is that people are able and willing to take on more debt now...and possibly the advent of other mortgage options. But that's only a guess, I have no real idea or data. I only know what I see and read and hear...and that's pretty much unanimously bad, except for persons in management, or upper echelon business types.

If you think the tech boom has been offshored, you are woefully uninformed. Software engineering is one of the most high demand jobs in the country right now. I'm working 2 professional jobs working 70hrs/wk at the moment doing programming work, and there are unfilled positions at every company I know of.

 

[feralkid]

Originally posted by: heartsurgeon
It's all about the leftist media trying to make Bush look bad......

they've try to convince the public that the sky is falling.

no credit ever, given to Bush tax cuts and the roaring economy and the sky high DOW.

I'm very pleased with the economy, and my personal financial situation. Never been better!

I'm happy for you, however; for everyone that's not doing so well?

I guess they should all shut up and eat cake, eh Marie?

:roll:

 

[jman19]

Originally posted by: LegendKiller

Originally posted by: CPA
Because most people don't have a clue about the economy other than the doom and gloom they hear on the 6 o'clock news.

Yeah, I work at the 5th largest bank in the world and underwrite hundreds of millions in securitization conduits while reading reams of economic research. I don't think this economy will last, so I guess all I do is hear the 6 o'clock news.

Nice try sparky.

An OT question, but is that 5th largest for investment banks, or all bank worldwide? And what indicator do you use (i.e., revenue)?

 

[Hacp]

Over the last 4 years, real wages have stagnated. That is, only 4% of the country has seen any increase in wages. That 4% is the country's elite. The economy might be up, but only 4% are seeing any effects of it.

 

[Mxylplyx]

Originally posted by: Hacp
Over the last 4 years, real wages have stagnated. That is, only 4% of the country has seen any increase in wages. That 4% is the country's elite. The economy might be up, but only 4% are seeing any effects of it.

Odd...mine has tripled. Never knew I was one of the elite.

 

[PingSpike]

I think the crux of the article is not that people are making signifigantly more or less money, which is debateable using different metrics and standards...but that life is much more complex.

The job market has always changed, with different sectors falling out of favor. But it seems like its changing faster now? Manufactoring has had a steady decline, but it took a lot of time so the carpet wasn't pulled out from under a lot of people.

People aren't staying at jobs as long as they used too, and they have to move around a lot more. I don't want to move, and I understand their are some sacrifices that I have to be willing to make to acheive that. But I started out in a much better position in life then a lot of people did. The violent pace is tiring, but it is what it is.

I remember reading an article on maybe cnn or msn or something. It was called "Hottest careers for 2007" or something like that. The whole premise of the article annoyed me. All of the jobs of course had big pay and required at least a 4 year degree. Great, I'll just drop everything and get a 4 year degree in one of these and then-whoops! those were the hottests jobs for 2007, its 2011 now those aren't hot anymore!

It made it sound like careers were fads that you had to follow that year, ignoring the fact that its impossible to do that. To me a more useful article would have been "jobs with a solid future" you know...beyond tomorrow.

 

[PingSpike]

Originally posted by: Mxylplyx

Originally posted by: Hacp
Over the last 4 years, real wages have stagnated. That is, only 4% of the country has seen any increase in wages. That 4% is the country's elite. The economy might be up, but only 4% are seeing any effects of it.

Odd...mine has tripled. Never knew I was one of the elite.

By your own admission you're working two jobs for a total of 70hrs/wk. I would hope you were getting signifigant compensation for that...since basically all you do is work. No offense meant, I just couldn't live like that myself.

 

[Hacp]

Originally posted by: Mxylplyx

Originally posted by: Hacp
Over the last 4 years, real wages have stagnated. That is, only 4% of the country has seen any increase in wages. That 4% is the country's elite. The economy might be up, but only 4% are seeing any effects of it.

Odd...mine has tripled. Never knew I was one of the elite.

Your own experience represents the experience of the whole country, right?

 

[imported_Shivetya]

because the stupid ones cannot see beyond their teeny part of the world?

then again, its because the press tells it is and they do so because of which party is president... people will accept it if you repeat it enough (its called the big lie - both sides do it well)

 

[vi edit]

I think the housing insanity that started around the beginning of the decade and has since fizzled out the last 2 years has a lot to do with it, at least from an emotional perspective.

From 2001-2005 you couldn't hardly go wrong buying a house. Money was dirt cheap to borrow. Houses were being sold the day they listed. New construction was through the roof. We actually SAW things being built around us. We scarffed up new construction and watched farmland and fields of scrub brush get turned into booming suburbs virtually overnight.

Fast forward to now...

Houses are sitting on the market for months. New construction is down. It's more costly (although still not terrible) to borrow. You can't flip a house for 10's of thousands in profits like you were able to.

Gas prices have doubled in the last few years reducing expendible income for many. Interest rates are going up and the ARMs on that housing boom are resetting further squishing those already tight budgets.

We aren't seeing the growth we once did. The housing hype has cooled off. People are having to forclose. The media is screaming the sky is falling. Money that was once being put into real estate is going back into equities helping prop up the stock market.

I know the housing market isn't the only indicator in the economic status of a country, but it's a big one that all of us see, feel, and sleep in every day. It was a growth that simply couldn't be sustained and was due to drop out at some point.

Combine that with an ever growing dissent towards our actions in the Middle east and you can see why there are some gloomy faces.

 

[BlancoNino]

We're just shifting from manufacturing-type jobs to more educated jobs in this country, in my opinion.

 

[dmcowen674]

Originally posted by: Mxylplyx

Originally posted by: Hacp
Over the last 4 years, real wages have stagnated. That is, only 4% of the country has seen any increase in wages. That 4% is the country's elite. The economy might be up, but only 4% are seeing any effects of it.

Odd...mine has tripled. Never knew I was one of the elite.

Well gee, P&N is good for something, you learned something.