Many blue-collar workers and many in the middle class feel they are falling further and further behind, no matter how hard they work. Millions of families are one layoff or one medical emergency away from going into bankruptcy. It is no wonder that the great American dream is no longer a house in the suburbs. It is now a secure job and any job will do.
[Read the U.S. News Debate: Should There Be More Quantitative Easing?]
Another depressant has been the drop of some 40 percent in the net worth of the average American family over the last five years. These are Depression-like statistics. The baby boomers who are now entering their 60s are at the epicenter of the tragic collapse of their net worth. They have scaled down their expectations and their expenditures, particularly as they worry about their departure from the workforce.
It takes time for a slump in household net worth to fully register, but it inevitably results in a drawn-out but profound effect on consumer spending patterns, as frugality becomes the new and lasting behavior. One reaction is to get out of debt as fast as possible, and indeed the ratio of household debt to after-tax income has dropped from 130 percent at its peak in the third quarter of 2007 to approximately 114 percent today.
[See political cartoons about the budget and deficit.]
Americans feel deflated by the numbers and the bleak small business sentiment. According to a Gallup survey last fall, 81 percent of Americans said they were dissatisfied with the way the nation was being governed, and 65 percent of people in a Rasmussen poll this month said they believe the country is on the wrong track.
The future of the unemployed is dubious, for when economic activity picks up, employers will undoubtedly first choose to increase hours for existing workers. Many unemployed workers looking for jobs once the recovery really begins will discover that jobs as good as the ones they lost are almost impossible to find.
On top of that, the business community has been alienated since the Obama administration abandoned early efforts to build confidence and rally the national will. It engaged, instead, in demeaning the private sector. America typically boos the losers, but this has become an administration that boos the winners.
[See Mort Zuckerman's 5 Ways to Create More Jobs.]
Key question: How will we find a way to have at least 500,000 more hires per month than we are now seeing? We have recovered less than 20 percent of the jobs lost in the recession, compared to previous recoveries in which over 100 percent of the jobs lost were recouped. This recession has shown employers that they can make do with fewer workers. Over 20 percent of companies say that employment in their firms will never return to pre-recession levels. Just as serious is that most of the newly available jobs don't match the pay, the hours, or the benefits of the millions of positions that vanished during the recession.
Millions of Americans are facing a lost decade, living from paycheck to paycheck, struggling to pay their bills, having to borrow money. They face a frightening future with deepening anxiety.
Los Angeles Times columnist Doyle McManus has raised the question: Can the president persuade voters to let him keep his job when so many of them have lost theirs? The buck stops with the president, and the latest opinion poll by CBS and the New York Times suggests he is paying a price for our disappointing recovery.
- Read Eric Cantor: Red Tape Is Stifling Job Creation
- Read David Brodwin: GOP Exploits Small Business for Political Gain
- Check out the U.S. News Economic Intelligence blog.
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