2000-2007: The boom that left us feeling busted
Well, that's a little bit of an exaggeration. Actually, if you were to account for inflation, consumer spending has risen by an anemic 0.1%. The other 0.3% increase was due to rising prices, specifically the increased cost of food and energy.
Basically, people are buying the exact same things that they were buying a month ago, but are now paying more for those items. And, to be honest, there doesn't seem to be a light at the end of this tunnel. Energy costs are probably going to keep on rising, at least for the time being, and food prices will probably keep pace. Basically, as economists keep telling us, we are at the tail-end of a boom cycle and we can look forward to an economy that will now readjust to reflect its actual dimensions.
Personally, I didn't really get much out of the boom. While my paycheck increased over the last few years, this was largely due to restructuring at my university and some very hard work on the part of my department head. Even so, when I left the university, I was making about the same as the manager of a McDonald's franchise. To be honest, this never really bugged me, as I simply accepted that wages in academia tend to be lower than those in the "real world." The sad thing is, though, that wages in the "real world" are down, too.
In a recent poll by the Pew Research Center, most respondents said that, over the past five years, their income has either remained the same or dropped. In fact, the median annual family income in the United States is currently somewhere around $60,576; adjusted for inflation, it was approximately $61,000 in 2000. A couple of hundred dollars may not seem like a major reduction, but some analysts argue that wage stagnation is just the tip of the iceberg. Statistics show that median household incomes, which doubled between the late 1940's and the late 1970's, grew by only 25% over the subsequent 30 years.
Luckily, there were other factors that helped the average family weather their unimpressive wage increases. For example, cheap gasoline, cheap technology, and a real estate boom all helped equalize the pressure, enabling many households to ignore the fact that they weren't really making enough money to get by. Recently, however, these bubbles have begun to pop, leaving many Americans feeling flat.
What's to be done? Well, according to David Leonhart, an economics writer for the New York Times, the last big boom wasn't an accident; after World War II, the federal government enacted numerous programs (including the G.I. bill and the interstate highway system) that were deliberately intended to foster growth in the middle class and generally stimulate the economy. Solving our current problems will probably take a comparable nationwide effort. This is, of course, reflected in the campaign promises of all three major Presidential candidates, all of whom are endorsing some sort of large-scale governmental program for economic growth.
Time will tell if a major federal effort will be enough to reverse the trend of the past 30 years.
Bruce Watson is a freelance writer, blogger, and all-around cheapskate. He's just praying that none of the Presidential candidates will use the term "National Malaise."