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Review: “BRAT” by Charli XCX
Published June 12, 2024

About that jobless recovery

Why are Americans so pessimistic about the economy as it enters a third year of expansion?

Friday, when the U.S. Labor Department releases its monthly employment report and Capitol Hill erupts in its ritualistic rounds of finger-pointing and credit-taking, I want just one congressman to step aside for a moment, look deep into a camera and tell the American people, “Yes, the economy is very strong. And no, I had nothing to do with it.”

OK, so the second part of that might be a little unrealistic, but I don’t think the first is so unreasonable. The U.S. economy is three years into a resilient and increasingly bullish expansion, and no one – save the people who want credit – seems to want to talk about it.

Last year the Wall Street Journal called it the “Rodney Dangerfield” economy, because it “can’t get no respect.” Capitol Hill Democrats have their reasons for trying to demoralize Americans on economic news, but that doesn’t give cause to major news stations for doing the same.

With every report Americans are told the economy is cruising along despite the wars in Iraq and Afghanistan, the “housing bubble,” high energy prices, rising health-care costs, budget and trade deficits, uncertainty in the Middle East, Nigeria and Venezuela, corporate outsourcing and the rise of India and China. This month, investors and executives will remain optimistic despite immigrant walkouts, the threat of more interest-rate hikes at the Fed and worries over inflation.

For most Americans it must be a wonder that the economy grows at all – much less at a breakneck 5 percent, as it did the first quarter of this year. More than 5 million nonfarm jobs have been created in the past three years, many of them in high-paying sectors like biotechnology and computer software engineering. Labor productivity gains continue to outpace other industrialized nations, the Dow looks ready to tick above its all-time high and real wages are now above the peaks of the Clinton-era expansion.

And yet most people are convinced things are bad and only getting worse. An American Research Group poll in April showed two in three adults think the economy is “bad,” “very bad” or “terrible.” And only 25 percent of adults think the national economy is getting better – coincidentally, the same amount as this time last year.

If the late 1990s are to be remembered for their “irrational exuberance,” then 2003 to 2006 will be remembered for their Grinch-like pessimism.

Why all the gloom and doom?

For starters, at least part of the cynicism is spillover from Iraq, Iran and slumping approval ratings for President George W. Bush and the U.S. Congress. Every day the press manages to convince Americans – just as soon as they set down their $200 cell phones and turn off their new 60 gig iPods – that we are still on an economic tightrope, balancing between recession and total financial collapse. Part of it also has to do with oil and gas prices, which we seem to blame on everything except our own gluttonous consumption.

Energy costs get at a larger point, and perhaps the real reason our cynicism has become so immune to good news. High energy prices – not to mention hefty health-care bills, the ongoing War on Terrorism, international models for doing business, economic progress in South and Southeast Asia – these are the rules of the game for the 21st century. And many Americans simply aren’t comfortable with it.

Take offshore outsourcing, something everyday Americans dread, politicians love to slander, but most economists – including the latest Fed chairmen – tell us won’t hurt us in the long run. Sending low-wage work overseas makes U.S. companies more competitive and frees up capital at home for new investments and more high value-added jobs. If outsourcing were really the threat Capitol Hill protectionists say it is, we would not have an unemployment rate today that is lower than the average jobless rate for the 1970s, 1980s and 1990s.

Or take China and India. Rep. Nancy Pelosi’s rhetorical arm flailing at Chinese President Hu Jintao’s visit last month is the same kind of embarrassing prophesizing legislators were doing 20 or 30 years ago when Japan was enjoying rapid growth. Now Japanese and American companies (Boeing is a good example) have developed cooperative relationships that benefit both nations. Already the exact same thing is happening with Chinese manufacturers and Indian service providers.

And if that is not comfort enough, just remember: China’s Forbidden City now has a Starbucks.

This is the new interdependent global economy, and Americans better get used to it if they don’t want to live in eternal anxiety. Whatever Washington protectionists and news reports seem to say, it is not through dumb luck that the U.S. economy is adding jobs and becoming more profitable and productive. It is because our entrepreneurial culture and hands-off business climate are putting us in a position to reap the benefits of this brave new world. That is, of course, if we are willing.

Darren Bernard welcomes comments at [email protected].


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