Today, the Conference Board reported that consumer confidence, after months of decline, is at a near 16-year low. This comes, of course, as no surprise. Recent polls have shown that Americans are overwhelmingly convinced that the economy is in catastrophic shape; Alan Greenspan is on record discussing the “the most wrenching” financial crisis since World War II. But what exactly accounts for this degree of despair?
Two weeks ago, in the Wall Street Journal, Zachary Karabell wrote:
[I]t would be a stretch to rank the current problems as especially notable or dramatic. Something else is going on–namely a cultural rut of pessimism that is draining our collective energy, blinding us to possibilities, and eroding our position in the world.
Right now we have an unemployment rate of 5% and headline inflation topping 4%. We have economic growth of 0.6%, extremely low consumer confidence and weakening consumer spending, small business optimism at a 28-year low, and of course a housing market that is showing declines in excess of 20% in some parts of the country.
These are hardly statistics to celebrate, but they are a far cry from the crises of the 20th century. Next time someone compares the present to the Great Depression, stop them.
Stopping all the people who make that claim these days wouldn’t leave you much time to do anything else. Karabell went on:
It is also common today to hear comparisons to the stagflation and grim economy of the 1970s. Here too perspective is in order.
For all the present talk of volatility, in 1973 and 1974 the economy expanded 10% in the first quarter of 1973, contracted 2.1% in the third quarter, went up 3.9% in the fourth quarter, went down 3.4% in the first quarter of 1974, then up 1.2% in the second quarter – continuing like a bouncing ball for another year.
The unemployment rate went from 4.9% in 1973 to 8.5% in 1977, and then nearly broke 10% in 1982. Meanwhile the stock market went from 1067 in January 1973 to 570 in December 1974, a drop of 46%. And there was double-digit inflation and a sharp rise in the price of oil, which represented a higher percentage of consumer spending than today.
Victor Davis Hanson has noted the same insistence over evidence that it’s almost breadline time:
Last week, I asked a fierce Bush critic what he thought were the current unemployment rate, the mortgage default rate, the latest economic growth figures, interest rates and the status of the stock market.
He blurted out the common campaign pessimism: “Recession! Worst since the Depression!”
Then he scoffed when I suggested that the answer was really a 5 percent joblessness rate in April that was lower than the March figure; 95 to 96 percent of mortgages not entering foreclosure in this year’s first quarter; .6 percent growth during the quarter (weak, but not recession level); historically low interest rates; and sky-high stock market prices.
There are serious problems–high fuel costs, rising food prices, staggering foreign debt, unfunded entitlements, and annual deficits. Yet a president or vice president running for office (and covered incessantly by the media) would at least make the argument that there is a lot of good news . . .
This gets to the heart of the matter. In 2004, James Carville astutely noted the following:
And by and large, our message has been we can manage problems, while the Republicans, although they will say we can solve problems, they produce a narrative. We produce a litany. They say, “I’m going to protect you from the terrorists in Tehran and the homos in Hollywood.” We say, “We’re for clean air, better schools, more health care.” And so there’s a Republican narrative, a story, and there’s a Democratic litany.
Carville is one of the Clinton faithful, but there’s no doubt that it’s Barack Obama who hit on the right narrative and figured out how to sell it. Couched in language about hope and change, Obama’s message is ultimately one of abjection and despair. From his routine stump speech to his time-stopping epic on race in America, Obama wants you to know that Americans have it bad, worse than you realized, and he’s going to get us out of it. Americans work every shift and still can’t pay their bills; they go hungry to pay for chemotherapy. But if he’s elected, together, under his audacious guidance, we just might make it through. He is a remarkably talented narrator and as we’ve seen his audience is rapt. The fact that there is some genuine financial concern in America lends legitimacy to his exaggeration. The vicious cycle is in place. We’re told the economy is dismal, we say so in polls, we read the poll results as confirmation of what we’ve been told, we look to the candidate for change who tells us the economy is dismal.
In 1992, Bill Clinton became president by convincing voters that the economy was tanking. It mattered not at all that that year’s growth rate was above the yearly average since 1945. As Americans continue to despair about the catastrophe that isn’t, Barack Obama inches ever closer to the White House.