There’s a new view taking hold in the commentariat: the U.S. economy is in much better shape, but the public—and even the president—aren’t quite ready to acknowledge the improvement.
It’s an interesting argument, and I can’t help but wonder if it was fueled a bit by expectations that the National Bureau of Economic Research would today declare an end to the recession. (Didn’t happen.) NBER has allies in the hold-out camp, and most of them, so far, seem to be to its left.
The latest dose of optimism came today from Robert Samuelson, who puts his cards right on the table:
When things were going well, it was said that the United States enjoyed a Goldilocks Economy. Growth was fast enough to produce jobs and higher incomes but not so fast as to generate inflation. In the same vein, it might be said that today we have an Oscar-the-Grouch Economy. Good news is discounted. Pessimism is trendy. Growth is considered too feeble to help real people. But there is some genuine good news — and it deserves attention.
Samuelson builds his case by pointing to good news—in the labor market, in pent up demand, and in “corporate America’s strong cash position.”
Then, as any columnist who has announced that he is paddling upstream should, Samuelson acknowledges the pessimists’ case (emphasis mine).
One cause of pessimism is that the U.S. economy is undergoing a fundamental change — and it’s unclear how successful the transition will be. Beginning in the 1980s, American prosperity depended increasingly on a debt-financed expansion of consumer spending and housing, as the Economist’s Greg Ip notes in a recent survey of the economy. In 1991, consumer spending and housing accounted for 70 percent of GDP; by 2005, their share was 76 percent. That boost has ended, because many families overborrowed, overspent and undersaved.
Interesting. Something else happened during that time. As David Leonhardt recently pointed out in a healthcare column we liked, “Since 1980, median real household income has risen less than 15 percent.”
Could that pessimism come from that awful feeling of being underpaid?