EuroWire July 2016

Transatlantic Cable

‘Uncertain times in the labour market’ Economists consulted by Mr Zumbrun point to “a few culprits.” (“Economists Disagree With Voters Who See US Worse O Today Than in 1960s,” 12 th May). Among them: † First, wages or available jobs have deteriorated for some demographic groups, particularly men without a high-school diploma and men who worked in manufacturing (two groups with some overlap) † Second, as noted by Joel Naro , chief economist of Naro Economic Advisers (Holland, Pennsylvania), Americans have just lived through the “ rst decade where the average worker lost ground.” Incomes overall declined during the two most recent recessions – although not enough to return people to a 1960s standard of living † Third, “Current material standards are much higher than in 1990, but the degree of uncertainty is far higher too,” said Lou Crandall, chief economist of Wrightson ICAP (Jersey City, New Jersey). The USA may be healthier and wealthier than in the past, but these have been more uncertain times in the labour market than many workers had anticipated † Fourth, many voters could be thinking primarily about broad social changes that have taken place in the USA over the past 50 years † Finally, the election process could be undermining con dence in the economy. “Switching presidents is always an uncertain proposition,” observed Mr Zumbrun. “But three-quarters [of the WSJ respondents in May] view this year’s election as especially uncertain.” On this point the experts and the voters draw closer together, with a sizeable group of the reporting economists – about 42 per cent – believing that uncertainty about the next president is already so high as to damage the national economy. Michael Carey, the chief economist for North America at the French banking network Credit Agricole, told the Wall Street Journal , “Businesses may defer investment and hiring decisions until they have a better sense of the direction of the next administration.” Mr Zumbrun concurred, noting that many economic decisions of businesses and consumers depend, at least in part, on con dence. He wrote, “This campaign season has been a long exercise in talking down that con dence.”

The USA economy

Optimistic economists and pessimistic voters: a strange disconnect in a presidential election year in America

“The 2016 presidential campaign has exposed worries among many voters about a US in decline. The sentiment played a particular role in boosting the candidacy of businessman Donald Trump, with [his] campaign slogan pledging to ‘Make America Great Again.’” Josh Zumbrun – a national economics correspondent for the Wall Street Journal in Washington, DC – went on to consider another feature of the current USA political season. The WSJ monthly survey of 70 business, academic and nancial economists, conducted 6 th to 10 th May, had posed the question whether living standards were higher today or at various points in the past. Some 80 per cent said these standards are higher today than during the 1990s and earlier. With the 1960s as a kind of touchstone, more general sampling produces a very di erent response. The Pew Research Center (Washington, DC) recently polled registered voters on the question “Compared with 50 years ago, is life in America better or worse for people like you?” To 46 per cent of its respondents, life seems worse now; to 34 per cent, better. A poll by Morning Consult (also Washington-based) asked voters whether the 1960s or the 1980s were better for them than today. In that survey, 31 per cent of respondents chose the 1960s; 37 per cent said they were better o in the 1980s. In marked contrast, while many economists view the USA as still not fully recovered from the recession that began in 2007 or the previous recession of 2001, even so a high majority say the country is a better place today than in either the Sixties or the Eighties. In other words, in the view of the experts these are good times for Americans – in fact, the best ever. There is no scarcity of solid supporting evidence. According to the Centers for Disease Control and Prevention, in 1960 the life expectancy of the average American was a full decade shorter than it is today. The median personal income, after adjustment for in ation, is 55 per cent higher today than in 1960, according to the Census Bureau. These measures of overall well-being rose throughout the 1980s and 1990s. Why, then, the pervasive insistence that there has been a half-century of decline in the United States?

Image: www.bigstockphoto.com Photographer Zsolt Ercsel

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July 2016