Monday, July 23, 2012

Leonhardt: "A Closer Look at Middle-Class Decline"

by Calculated Risk on 7/23/2012 01:55:00 PM

Here is a series I'm looking forward to reading ... from David Leonhardt at the NY Times: A Closer Look at Middle-Class Decline

Arguably no question is more central to the country’s global standing than whether the economy will perform better in the future than it has in the recent past.

Over the next few months on this blog, several colleagues and I will look in some detail at the challenge and at possible ways forward, and we’ll encourage you to weigh in with questions, ideas and other feedback.
Leonhardt starts with:
Since median inflation-adjusted family income peaked in 2000 at $64,232, it has fallen roughly 6 percent. You won’t find another 12-year period with an income decline since the aftermath of the Depression.

This unhappy phenomenon has two major sources. First, economic growth in this country has been relatively slow in recent years, which means the total bounty that the American economy produces, to be shared by all of its citizens, has not been growing very rapidly. Even before the financial crisis began in 2008, economic growth in the decade that started in 2001 was on pace to be slower than growth in any decade since World War II.

Then of course came a deep recession that caused the economy to shrink.
In addition to the slow growth in overall size of the pie, the share that has been going to anyone but the richest Americans has been declining. ... In the simplest terms, the relatively meager gains the American economy has produced in recent years have largely flowed to a small segment of the most affluent households, leaving middle-class and poor households with slow-growing living standards.
A very important topic.