In the United States, nearly one-third of adults, about
76 million people, are either "struggling to get by" or "just getting
by," according to the third annual survey of households by the Federal
Reserve Board.
What are we to make of this? Is 76 million a lot? Does this survey
tell us anything about the economic well-being of Americans, or just how
they "feel". I'm sure there were days when Trump felt he was
struggling to get by (how many bankruptcies did he go through?) How
many of these people are middle class (or upper middle class) Americans
who borrowed too much, and how many are poor?
The Fed policy committee should take the survey to heart
when it meets this month to decide whether to raise interest rates.
Higher rates are a way to slow an economy that is at risk of overheating
-- a far-fetched proposition when tens of millions of Americans are
barely hanging in there.
Let's say the survey means exactly what the NYT assumes. I still don't
see how it relates to monetary policy. Lots of Americans felt like there
were "struggling" back when Jimmy Carter was President, as prices rose
faster than wages. Was this an indication that easier money was needed
to fight 13% inflation? Is the NYT seriously suggesting that the FOMC
should base its decisions on the fact that 76 million Americans say they
are "barely hanging in there"? What happened to the 2% inflation
target?
Congress and other economic policy makers, as well as the
presidential candidates, could also use the survey to get some insight
into Americans' real economic problems. Among them is deep insecurity.
Nearly 70 percent of adults said they were "living comfortably" or
"doing O.K." -- up a bit from previous years -- but nearly half of all
respondents said they could not cover an unexpected expense of $400, or
could do so only by selling something or borrowing money.
Here the NYT is winking to its affluent readers. The subtext is that
while 70% of Americans say they are doing OK, that can't be right
because "you and I know" that someone unable to pay a $400 bill cannot
possibly be doing OK. NYT readers will occasionally drop that much at a
dinner for two in a fancy restaurant in Manhattan.
Americans seeking a path upward through education are
staggering under a load of debt. The median debt load for someone with a
bachelor's degree was $19,162.
Staggering? Recall that the vast majority of Americans do not have
college degrees, and those who do tend to be relatively well off (even
by American standards, the richest major country in world history). I
very much doubt whether the typical American college grad would be
staggered by a college debt of $19k, which can be spread out over a
decade or more. Most college grads are probably in jobs paying over
$50,000.
And now for the grand conclusion, the "now more than ever" policy
recommendations, pulled right off the shelf without an ounce of actual
thought:
Over all, the survey depicts an economy in which many
Americans face daily hardship, while even the college educated -- the
presumed winners in the economy -- still face big obstacles. The findings argue
for continued low interest rates; for government policies and federal
spending to help create good jobs at good pay; for affordable education
that starts at preschool, thus fostering college-ready students; and for
a safety net that can withstand today's potent economic forces.
(emphasis added)
Of course the "findings" don't "argue" for any of that. There is no
conclusive evidence that preschool makes much difference. (Studies are
mixed.) As for the federal government creating "good jobs at good pay",
the more $100k plus bureaucrats in the DC area, the higher the tax
rates on those struggling families in Youngstown, Ohio. That worsens
inequality.
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