WHOSE BOOM?

Unfortunately, I think Matt Yglesias is right, and this Fred Barnes column – on why most Americans aren’t more optimistic about the state of the economy – doesn’t do the work it sets out to do. Maybe there’s plenty of micro-level data showing that things are getting better for the average worker, and the Bush Administration just isn’t talking up the right data, but Barnes’s examples don’t prove that point:

Yet there’s a strong case Bush and his aides can make for impressive economic gains at the individual level. True, rising healthcare costs have cut into the gains, but tax reductions have helped. By citing micro numbers or fleshing out macro numbers, the administration would convey this message: it’s not just you who’s doing well. Most Americans are. The country is.

For instance, there’s the growth in per capita disposable personal income from $26,424 in 2003 to $27,001 in 2004 and $27,365 in 2005. That’s not all. In November, hourly wages were up 3.2 percent. And people are able to spend more. Real personal consumption spending has risen nearly 3 percent in the past year. True, these last two numbers are macro, but they’re ones people can understand.

But if the last two numbers are macro, then we’re left with only the growth in per capita disposable personal income to prove the micro-point – and any “per capita” number is easily skewed by large gains in the upper brackets that don’t necessarily extend to the median worker. Which is exactly what’s been happening of late, so far as I can tell – the well-off are getting better-off, and the median American income is stagnating. This isn’t disastrous news – as Matt notes, we’re a pretty rich country, and even with some stagnation our median income is the envy of most of the world. And the rich-getting-richer phenomenon isn’t necessarily the fault of George W. Bush or the GOP in general, as even Paul Krugman was obliged to admit recently. But it’s still something that Republicans need to grapple with more seriously than they have – because the trend is likely to continue, as globalization drive down wages for blue-collar workers while the premium for a college diploma goes up and up; and because a lot of those median-income Americans with stagnating incomes belong to the GOP’s base.

– posted by Ross

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