If you examine the statistical performance of the American economy at the end of 2015, all looks well. The US is generating solid growth, producing lots of jobs and creating plenty of wealth, even as Europe and China slog along.
But there’s more than one way to judge American prosperity, and here’s where things get rougher: Assess the public’s mindset and you’ll find the American psyche still reeling from the Great Recession. The Americans are uncertain, far too pessimistic, Yahoo reported.
This week should have marked the capstone to recovery from the financial crisis of 2008-09, but it’s going to fall short because of how people feel. The Federal Reserve is expected to raise interest rates on Wednesday, which have been kept near zero for seven years.
It’s about time. Even if the Fed delays the decision until another meeting, the big day is coming: With this rate hike, the country’s economic state of emergency will recede. The people will finally be on the move toward normal footing, and in America normal should mean good.
“It’s hard to feel celebratory, though, isn’t it? That’s because the Fed’s justification for raising interest rates is based on data analysis. Meanwhile, Americans are frustrated, struggling to keep afloat, worried about the future or nagged by the notion that their prospects should be better,” The Chicago Tribune reported.
The top-line numbers on the economy do sound excellent: six straight years of growth, with unemployment down to 5%, a proxy rate for full employment. Since the worst of the recession, the economy has created about 13 million jobs, while the stock market has nearly tripled. Inflation is low, to boot.
Unfortunately that’s not the end of it: The growth is unimpressive, stuck at about 2.25% per year. The unemployment rate is low in part because so many Americans have dropped out of the workforce. Many other workers have gone a long time without a decent raise. Those numbers show wages finally seem to be rising again, but it’s tentative movement—it’s too soon to tell if it sticks, and it’s not enough to delight Americans.
The anxiety is real, and one sees it in political polling, too. Voters may be more worried at this moment about the terrorist threat, but they are deeply concerned about their future prosperity and willing to look beyond the establishment candidates for relief. That’s one reason for Donald Trump’s unexpected performance; the guy has his finger on the electorate’s jittery pulse.
The presidential contest is putting on display some of the ideas for rejuvenating the economy and making it work for more people— especially on how to restore more robust growth.
Yes, the American dream lives. But an economy generating more investment and jobs would be better for all Americans. Gradually returning interest rates to market-driven (as opposed to Fed-entombed) levels is an overdue step in that direction.
