Sure, there are problems with the economy. But there are always problems with the economy, even during the halcyon days. And today, things are better in some ways than they were during past periods we tend to regard as times of peak prosperity.
The unemployment rate has been falling for 6 years and is now at 5.3%, which is lower than the average during the 1990s (which was 5.7%). Layoffs have become so uncommon that initial claims for jobless insurance just came in at the lowest level since 1973. The employee-confidence index maintained by job-search firm Glassdoor is at the highest level since 2009, when the series began. “We are seeing clear signs that the economy is in really good shape,” says economist Joel Naroff of Naroff Economic Advisors.
There’s more: The housing market has been a missing piece of the slow-motion recovery that began in 2009, but existing home sales (about 90% of all home sales) are now back to the normal pace from before the housing bubble began to inflate around 2003. There are once again bidding wars for homes in vibrant areas, which tells you plenty of people are saving money for a big purchase. And there’s plenty of room for further improvement as lenders ease up on credit standards and more people feel confident enough to take the plunge and commit to owning a home.
Meanwhile, gas prices and interest rates are low, inflation is tame, a six-year stock market rally has restored billions in lost wealth, and the world economy barely hiccupped at the much-feared prospect of a financial meltdown in Greece a few weeks ago. If you’re wondering when the economy is going to get hot, the answer might just be -- now.
Yes, yes, yes — there are still big problems with the economy. Wage growth has been meager. Too much income is flowing to the top 1% and not enough to the lower 99%. Digital technology is displacing old jobs faster than it is creating new ones. The cost of healthcare and college education — two enablers of prosperity — is rising much faster than overall inflation or the typical family’s income. “The U.S. is headed for an economic disaster of global proportions,” one reader wrote after Yahoo Finance published a recent story about upbeat consumers. “Don’t say we didn’t tell you.”
Ongoing problems such as income inequality and digital disruption are legitimate problems for those afflicted by them. But simply waiting for the economic recovery to lift every boat may be futile. The recovery won’t lift every boat and it may already have lifted as much as it’s capable of lifting. That means it may be time to rethink how to help those left out of prosperity.
The point isn’t to delcare winners and losers or single out those who can’t cut it in a Darwinian economy. The point is to figure out what’s working and what’s not. In the United States, the corporate sector is working, the digital economy is going gangbusters, housing is well on its way to a comeback and consumers, overall, are spending just enough to keep pushing the economy forward.
Here’s what is not working: Parts of the economy that represent the 20th century, rather than the 21st. Lower-skill assembly-line jobs are being replaced by robots and software. Small retail operations are vulnerable to online services and bigger, more efficient competitors. Construction jobs are only coming back in areas with strong population growth. Even energy jobs, once thought recession-proof, are disappearing as oil and other commodities plunge in value. And there are not enough good-paying jobs for everybody who wants one, as those positions now favor high achievers but punish the mediocre, who might have gotten along just fine 20 or 30 years ago.
So we may need new policies for helping people get ahead, beyond the usual assistance programs such as Medicaid, unemployment insurance and disability aid. In general, those are structured as temporary assistance, not permanent support. It may be time to come up with new types of job training, relocation assistance, hiring incentives for veterans and other programs meant to funnel people into the productive economy instead of tiding them over until prosperity comes knocking. President Obama has proposed a few such programs, though Congress hasn't given them a serious hearing. Reinvigorating the middle class is sure to be prime topic of the 2016 presidential race, as well.
Second, individuals need to take new steps to boost themselves out of a rut. Some workers fall behind because they’re stuck in a place where the economy has simply dropped into low gear. They need to go where prospects are better. Others need to change fields or get more education. Private companies and the government can help by doing a better job of publicizing where the good jobs are and what kind of training they require. This missing piece now may be imaginative new ways to accomplish what simply waiting your turn did in the past.
Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.