The American economy is in a rough patch. But the long-term trends are good—and there is a price to economic pessimism.
When a presidential election year collides with iffy economic times, the public’s view of the U.S. economy turns gloomy. Perspective shrinks in favor of short-term assessments that focus on such unpleasant realities as falling job counts, sluggish GDP growth, uncertain incomes, rising oil and food prices, subprime mortgage woes, and wobbly financial markets.
Taken together, it’s enough to shake our faith in American progress. The best path to reviving that faith lies in gaining some perspective— getting out of the short-term rut, casting off the blinders that focus us on what will turn out to be mere footnotes in a longer-term march of progress. Once we do that, we see the U.S. economy, a $14 trillion behemoth, is doing quite well, thank you very much.
So many data points add up to steady, continuing progress for average Americans—and there’s no reason not to expect the future will bring further progress (see examples in the charts above). Bad news will pop up from time to time, just as it has in every decade of American history. Some people will take the negatives—the hiccups on the long road to progress—for harbingers of worse times to come.
W. Michael Cox and Richard Alm of the Federal Reserve Bank of Dallas answer the question "How Are We Doing?" The answer is "pretty good."