Irwin Stelzer breaks how the U.S. economy performed over the past year. The “good parts” version:
Big-company share prices rose by more than 20 percent, and the high-tech and small-business sectors soared at twice that rate. Productivity is scaling new heights, profits are up, incomes are rising, inflation is nonexistent, and the dollar is in a so-far agreeable decline, shrinking the trade deficit. The unemployment rate has fallen to the level it averaged in the 1990s, which decade included both boom and bust. The Bureau of Labor Statistics’ survey of households shows that over 2 million more Americans are working at year end than were employed at the start of 2003….
It is fashionable to dismiss these indicators of material prosperity on two grounds. The first is that inequality is rampant and rising; the second is that money can’t produce happiness.
There is no question that statistical measures show a rise in inequality. The main reason: America welcomes more immigrants–legal and illegal–than all the other countries of the world combined. These newcomers typically start at the bottom rung of the economic ladder. Exclude them from the statistics, calculates [Gregg] Easterbrook [in his new book The Progress Paradox], and the increase in inequality disappears. Indeed, for the 9 out of 10 Americans that are native born, inequality is declining.* And here is the reason that will surprise America’s critics: The decline in inequality is due in good part to the rising affluence of African Americans.
Which leaves happiness, a commodity many argue cannot be bought with money.
Many, but not everyone — go check out Robert H. Frank‘s argument that money does buy a measure of happiness in last Sunday’s New York Times Magazine. Link via Virginia Postrel, who has a lot of interesting posts up at her blog.
*UPDATE: Virginia fact-checks the Easterbrook assertion cited by Stelzer and finds some problems with it (posted by Daniel Drezner).
… AND LOOKING FORWARD TO 2004: Projections for next year also look promising. The Conference Board predicts the highest rate of growth in twenty years, while this Michigan forecast predicts the creation of 5 million jobs over the next two years.
Two caveats to this — the first is that like political foreacsts, economic predictions are often wrong.
The second is that the structural macroeconomic problem is getting worse — as Julian Sanchez explains (posted by Daniel Drezner).
The Dish 