Missing the Point

Ben Stein writes that the U.S. economy is in great shape:

The bond markets have rallied staggeringly. The stock markets had one of their best months ever in April. The rate of defaults on corporate bonds remains extremely low. And index securities that track mortgage defaults are saying that the fear of a colossal national mortgage default epidemic was ill-founded.

Just as I am writing this, new employment data has come out showing only very small job losses in April — 20,000 jobs out of a labor force of very roughly 160 million, meaning that 1 in 8,000 jobs has been lost. The actual rate of unemployment is falling to a very modest level — 5 percent.

Yet the national media is still selling us fear of a recession. One of the major national newspapers has a reporter who’s desperately trying to peddle a story of national economic collapse even as the economy stays afloat.

Leave it to an economist to look only at numbers and miss the larger picture. Yes, the United States is not currently in a recession (at least not yet). But that does not mean everything is going well. The stock and bond markets mean absolutely nothing to people on a day-to-day basis. People who have stock portfolios do not derive regular income from them; the money sits for decades until retirement. People rely on their jobs for their livelyhoods.

Employment is indeed high, but Stein does not address the quality of those jobs. For example, wages are not keeping up with inflation, many recent college graduates are working temporary or menial jobs while facing crushing debt from credit cards and student loans, and more employers are reducing or cutting their health-care benefits. But, hey, at least they’re employed! (They’re actually underemployed.)

Most importantly, Stein does not address the culture of debt that now exists in the United States. More and more people are faced with expensive mortgages, maxed-out credit cards, and massive student loans. Other people who have no health insurance take on thousands of dollars of debt if they need emergency care.

At some point, the house of cards will fall. Perhaps it has already begun. Yes, the economy is doing wonderfully.