Americans are unhappy and their biggest complaints are about the economy. That’s peculiar considering there is so much economic good news out there. Gas prices are at record lows that are likely not to been seen in our lifetimes again, which is putting a lot of extra cash into our collective pockets. Yet low energy prices are not translating into happier consumers or price breaks in industries profiting from lower fuel costs.
It’s the same story in other aspects of the economy, like the jobs front. Unemployment is at an enviable four point nine percent, close to what many economists consider full employment. Yet that good news is doing nothing to blunt America’s anger, with a majority of voters saying the economy is going the wrong direction. On both sides of the aisle, Americans are turning to outsiders for relief. There’s no talk about full employment, low mortgage rates or gas prices, instead the conversation centers on closed factories, stagnant wages and declining opportunities for anyone who doesn’t have a college degree.
Expenses Up, Income Flat
In the wake of the Great Depression consumer spending recovered faster than worker income. A study by the Pew Charitable Trusts shows that median income fell thirteen percent from 2004 to 2014. That discrepancy created, in essence, what are two economies. In the economy of the upper incomes, life is good. The wealthy are spending much less on housing and transportation as a percentage of their income because their income gains have trumped those lower down on the economic ladder. For the lower economic class and what’s left of the middle class, the picture is somewhat different. Housing costs have grown by more than fifty percent since the late 1990s while wages have not kept pace. That means lower income families are paying a higher percentage of their income for core needs such as shelter, transportation and food. Hence the disconnect between the affluent and the rest of us.
Less Slack In The Budget
Understanding why these economic issues are important now is critical to understanding the political atmosphere. A close examination is likely to determine that the reason middle class families feel strapped is because in 2004 most families had $1,500 left after monthly expenses. By 2014 that figure had fallen by $3,800, which leaves the average family $2,300 short every month. If you want to know why debt is going up faster than income, there’s your answer. If you want to know why Americans are angry when everything else seems to be going well for the economy, it would be the same answer. Americans are finally hitting the financial wall.
Compensated With An Extra Income
These spending pressures are not new; for many years Americans were able to pick up the slack by having both spouses working. The days of dad as the family breadwinner were replaced by the two income family. That worked from the late 1970s and early 1980s until just recently. In 2014 the monetary rope for middle and lower class Americans finally ran out.
That’s why we’re seeing so much discontent at a time Americans should be feeling good about the economy. That’s why establishment candidates on the left and right are feeling the blast of voter discontent. Every campaign office in America should hang up a sign with the number $2,300 on it. That’s why Americans are unhappy and that’s what needs to change.