Life Looks Abundant

Pat Regnier at Money Magazine did a nice job in explaining why Americans are so unsettled these days regarding an economy that, by all traditional measures, is healthy and firing on all cylinders.

In opinion polls over the last couple years, the economy has consistently ranked just behind the war in Iraq when people were asked what they are most concerned about. Since energy prices have tumbled and the situation in the Middle East has become more dire, the separation has widened. But, a statistically sound economy continues to come in second.

From Is it time for a New New Deal? come a few thought-provoking ideas:

So how are you doing? Money-wise, that is.

One way to answer this is to take a look around your house. There's a flat-panel TV in the family room, an MP3 player docked to your computer and a tangled mess of cell-phone chargers over by the kitchen counter.

You have more clothes in your closets than you can wear. (Crazy how cheap a T-shirt is these days, isn't it?)

Those closets, by the way, are surrounded by a house that's bigger than the one you grew up in and is worth maybe twice what you paid for it.

Out in the driveway on the car you bought with 6 percent financing, perhaps there's a window sticker bearing the name of your kid's university.

Life looks abundant.

Then again, maybe you answer by opening up that desk drawer in your bedroom. The one with all the bills and paperwork you slog through the first Sunday of the month.
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The high-tech, free-trading, wildly productive New Economy is showing its other face. Call it the Anxiety Economy. By most of the obvious measures - GDP growth, unemployment, inflation - things are good. But wages have been growing very slowly of late, and middle-class and even upper-middle-class Americans are reminded every day that their families are just a bad break or two away from a financial crisis.

More people are getting angry: The November elections heralded the arrival of a new voter bloc, the "Lou Dobbs Democrats," who blame cheap foreign labor and immigration for anxiety about our jobs.

According to Republican pollster Frank Luntz, anxiety abides, even if you don't feel personally threatened. "People think they are doing okay," says Luntz, "but that everyone else is badly off."

It's no wonder that prescription drug usage for anxiety related ailments is at an all-time high. We're a medicated nation that can't quite understand what's wrong, yet we know there is something wrong.

This graphic makes the case for an era of income instability and rising prices that requires workers to toil longer and harder. There was a fourth item related to retirement, but with so many other present-day issues to worry about, does anyone really think much about retirement until they're in their 50s (when it's almost too late)?


It's almost as if people look at the value of their home and figure that their lack of saving and planning for retirement has been taken care of for them. Well, probably not "almost as if" - that's the reality today for many. If home prices crater in the years ahead, that concern may move quickly to the top of the list.

The story goes on to discuss a number of major concerns:

You face more competition.
Those new hands [workers in Asia] aren't all going to be set to building cars and toasters. They'll be engaged in what economists call "tradable services," which include any job that doesn't need to be done in person.
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Your income is less reliable.
A 2005 study by economist Henry Farber, also of Princeton, found that the average college-educated person who loses a job earns 14% less on the next job.
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Your employer is rolling up the safety net.
Today, 19% of workers with a retirement plan have all of it in a traditional pension, according to research from Boston College. Twenty years ago, that figure was 62%.

Increased debt loads and "stealth" inflation are given short shrift.

That probably makes sense because unless there is someone calling you because you can't pay your bills, you probably don't worry about how much money you owe. And "stealth" inflation - where prices rise all around you while the government says that inflation is contained - is, by its nature, difficult to observe.

On the brighter side, think of all the cool stuff we have today:

For Brink Lindsey of the free-market Cato Institute, the look-around-your-house test is the one that matters. "Despite a lot of statistical mumbo jumbo from the sky-is-falling crowd," he says, "Americans are enjoying a level of material prosperity unrivaled in the world."

In a pugnacious Wall Street Journal review of Hacker's book ["The Great Risk Shift" on income instability], Lindsey points out that since the 1970s, the number of college-educated adults has more than doubled, home ownership has risen, and air conditioners, color TVs and dishwashers (most no doubt built in cheap labor markets) have become fairly common even in households living below the poverty line.

Now, stop your belly-aching and get back to work.