- Unemployment is at record lows and the stock market is at record highs, yet Americans largely don’t feel confident about the future.
- That’s because those two numbers – easily the two most watched in the US economy – don’t capture what’s wrong with the country’s economy.
- The problem is costs, which have exploded over the past few years. Suddenly, having a job doesn’t mean as much for Americans, most of whom don’t own stocks anyway.
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The economy sounds good, but it feels bad. And it’s because the most common measures Americans use to monitor its health – the stock market and unemployment numbers – aren’t enough to tell us what’s deeply wrong with the country.
With numbers like the ones we’re seeing, Americans should be optimistic about the future. Unemployment is at record lows, and the stock market is at record highs.
But we’re not. Americans are broadly pessimistic about what’s coming next, the Pew Research Center found earlier this year. Increasingly, they believe that our political and economic systems work only for those with power.
This is because neither the stock market nor employment data captures what’s ailing most American families: rising costs for critical, necessary items. Meanwhile, despite wages eking up a little bit since the financial crisis, adjusted for inflation,Americans haven’t gotten a significant raise since 1999.
This is why Americans are drowning in debt: We have $US1.6 trillion in student debt; $US1.4 trillion in auto-loan debt, now held by 35% of Americans, up from 20% in 1999; and a record $US13.3 trillion in consumer debt as of the end of 2018.
As for the stock market, most people aren’t involved. Only a little over half of American families owned a single stock in 2018. So while it’s often a useful measure to understand what’s going on with corporates or specific industries, it’s not useful for understanding how much money is in America’s wallet.
Employment numbers don’t tell you anything about that. Having a job doesn’t mean as much as it used to because wages simply don’t cover the same costs they used to.
Meanwhile, since 1989 the share of wealth held by the top 1% of households has exploded, while for the bottom half things have frozen in time, according to the Federal Reserve.
Corporate profits are at record highs. Companies just got a massive tax cut, and instead of investing in equipment or higher wages, they have, for a variety of reasons – including uncertainty surrounding President Donald Trump’s trade war – bought back their own stock at a record rate. Low interest rates are allowing them to borrow for cheaper than ever too, so they’re awash with cash.
The Trump administration may point to unemployment and the stock market to crow about this economy, but if you don’t feel like you’re sharing in the wealth, you’re not crazy. Things just aren’t working the same for everyone.
The good news is that no one has to put up with this. Numerous bad policy decisions, as well as lax enforcement around corporate power, led us to this moment. We can reverse course, but we have to start thinking about the economy the right way and paying attention to the right numbers to start heading in the right direction.
When we talk about wages, we should talk about where they have gone since the 1970s, not the financial crisis. We should be working on increasing the number of Americans who make a living wage, not just any wage. Otherwise, you’re not seeing how this economy really works.
Editor’s note: An earlier version of this column cited figures from Adam Levitin, a Georgetown Law professor, included in a Wall Street Journal article that were later corrected by that publication. They have been removed.
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