The Real Reasons

I don’t agree with Neil Irwin that any of the reasons he gives in his article in the Washington Post are the main reasons why Americans are sourer about the economy than looking at the numbers might lead you to believe they should be. Mr Irwin suggests three reasons: food and gas prices hit people where they live, the credit crisis has resulted in a loss of home equity which also might be taken to heart, and the relative turndown is dramatic.

I don’t think it’s any of those things. I think that first and foremost the macro numbers don’t reflect how most people are experiencing America’s economy today. Basically, the average Joe doesn’t see as much money in his pocket at the end of the week as he used to. The fancy words for this are that most of the income gains over recent decades have gone to the highest income earners. Cost increases, on the other hand, are spread around pretty well.

Another reason is that the present administration in Washington is without doubt the lousiest cheerleaders for the economy of any in my lifetime.

I also think that people are reacting as they are because they read newspapers and watch TV news. Those opinion makers are heavily concentrated in New York and Los Angeles and, surprise, New York and Los Angeles are feeling the pain more than Chicago is. Every time a newsreader in New York or Los Angeles goes to a neighborhood party he or she is surrounded by unemployed financial folks and real estate salesman who aren’t raking it in the way they used to. That tends to color one’s view of how bad things are everywhere.

And of course there’s the plain fact that reports of hard economic times in the New York Times are as predictable in an election year as the sun rising in the east.