JUDGMENT CALLS

Robert J. Samuelson

The Real Economic Scorecard

Are Americans really better or worse off?

Sep 3, 2008 | Updated: 10:57 a.m. ET Sep 3, 2008

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Just last week, the Census Bureau released its annual study of household incomes, poverty and health insurance -- often called the nation's "economic report card." Its hard numbers seemed to confirm how many Americans feel. Sure, we're prosperous, but prosperity is fraying. Except for the rich, living standards are stagnant. Poverty is up; health insurance coverage is down. Naturally, both Barack Obama and John McCain seized upon the report to claim that their policies would restore progress.

Hold it.

Though echoed by policy wonks, pundits and politicians -- last week, Bill Clinton -- the conventional wisdom is wrong or, at least, misleading. Here's a more accurate assessment. For most Americans, living standards are increasing, albeit slowly, over any meaningful period. But rising health spending is eroding take-home pay, and immigrants are boosting both poverty and the lack of health insurance. Unless we control health spending and immigration, the economic report card will continue to disappoint. Unfortunately, neither Obama nor McCain seriously addresses these problems.

Superficially, the conventional wisdom seems convincing. The Census Bureau found that median household income in 2007 was $50,233. Though up 1.3 percent from 2006, that was still less than the peak of $50,641 in 1999. (The median is the midpoint; all figures are in inflation-adjusted 2007 dollars.) Meanwhile, the share of people below the government's poverty line -- about $21,000 for a family of four -- was 12.5 percent, up from 11.3 percent in 2000. Finally, the ranks of the uninsured have increased in six of the past eight years. They're now about 15 percent of the population.

Case closed? Not exactly. Here are three reasons why (space precludes mentioning others):

First, comparisons are made to an artificially high benchmark -- the late 1990s "tech bubble."

Member Comments

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Posted By: Generic Person @ 09/06/2008 6:02:07 AM

Did anyone decide to read the article or did they just decide to bash it? There are so many crap comments here that I can't even read them all, let alone point out why they're wrong, but I'll try my best.

Calling this article Republican propaganda, and its author an apologist is incorrect, here's why

http://www.highbeam.com/doc/1P2-747833.html

What's this? It's an article about the same topic written in October 8th 1997, in the middle of the Clinton administration.

The article has a few differences but the main idea is the same, and it's supported by the mostly the same causes in the article above.

Mr. Topcan2001 put up a good point with only a small amount of pretentiousness. Apparently 2007 was a boom year for the housing bubble and should be compared to another peak in order for accuracy.

Oh but what's this?

http://en.wikipedia.org/wiki/United_States_housing_bubble#cite_note-Fortune_deadzone-15

That's odd, it says here the housing industry began declining in 2006 and led to a crisis in 2007 of August, that sure doesn't sound like an economic peak to me.
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Posted By: topcat2001 @ 09/05/2008 5:13:31 PM

What this idiot fails to note that is 2007 was also a boom year fueled by the housing boom. You should compare 1997 to 2004 or 2009 and then you will get the real picture.
Another Republican trying his best to tell people not to believe their eyes and ears about falling wages but to go back and live in 2007 and enjoy the prosperity and only compare themselves to the year they cherry pick.
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Posted By: Adrian Zolkover @ 09/04/2008 6:02:06 PM

I'm afraid next year's census figures may be alarmingly worse. Most loan documents I have read contain a clause that says that any time, with a number of days to complete the transaction, the lender may call the loan for the balance of cash lent. That's OK if your property is worth more than it was when you entered into the loan agreement and you can get another loan to pay-off the present loan. But, say if your house is worth 35% less than it was when you purchased it, your equity may be wiped out. And if your lender is amongst many lenders that must raise cash, it may be almost impossible for you to get another loan. This could have a horrible domino effect. I've read at the U.S. Comptroller of Currency, Administrator of Banks site, "OCC's Quarterly Report of Bank Derivative Activities 3rd Quarter 2007", that the 25 U.S. banks with the most derivative investments have derivatives totalling $171,771,444 TRILLION. And their asset base is losing its value. I read that the wealth of all the economies in the world is about $97 trillion. To me this signifies these tremendous bank values have tanked, to say the least. For instance, Morgan Chase had $91,734,451 trillion in derivatives, which gives them a credit to capital ratio of 416.4 (not 416.4%). Help! Anyone know about this?