It’s hard to see how the country’s mood could get any more negative, despite a two-year bull market and signs of job growth. But even if the many prophets of doom are right, where else would you want to be when armageddon comes?
We’re living through a depression of epic proportions.
I don’t mean an economic depression, of course—the world seems to have dodged that bullet for the moment.
But we’re now a decade into a steep downturn in the national mood, which shows no sign of improvement despite a two-year bull market in stocks and months of notable employment growth.
Some measures of the funk we’re in:
It might have something to do with the fact that real household income has stagnated for more than a decade, while economic inequality has increased sharply, with the top 1% of the households hogging 58% of all gains seen over a recent 32-year stretch.
Is This a Pessimism Bubble?
Now, factor in the recent financial collapse, and the resulting pursuit of unconventional monetary policies.
Federal Reserve Chairman Ben Bernanke may be right, as he said today in Atlanta, that the recent pick-up in inflation will prove transitory in the medium term. But the market’s response today was to bid gold prices sharply higher to a new record.
Traders appear to be listening less to the man with the monetary powers and the Princeton pedigree than to the charlatans selling the “end of America” and the threat of hyperinflation.
The gulf between economic performance and the direction of asset prices on one hand, and popular political perceptions on the other, is just about as wide as it can get. Either the sour sentiment dooms the uneven growth now under way, or stronger and broader growth will perk up sentiment.
The latter is the likelier outcome. Pessimism is at a historical extreme, and growth is not—so it could get considerably better.
We’ve seen rapid turnarounds in the past. Between January 1997 and February 1998, the proportion of respondents who told Pew they were satisfied with the national trend rose from 38% to the aforementioned 59%.
How did that happen? All it took was for unemployment to hit longtime lows, while incomes rose nicely and inflation remained tame.
We’re not likely to revisit that nirvana in the near term, of course. But don’t we need to feel at least a little better?
Perhaps we already do. When Gallup asked people about their overall quality of life, rather than the perceived direction of the country, 77% pronounced themselves “satisfied” in January, down just five percentage points in three years.
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