Of the Millennial generation, Michelle Conlin writes "They don't need an economics degree to understand that the middle class is squeezed." You can be sure of that, only because those who with such degrees know better.
Adjusting for fringe benefits and improving quality, people of all income levels are experiencing rising standards of living. Those that rely only on income data miss what those incomes can buy. The vast majority of products are cheaper, either in the form of lower prices or better quality. The evidence is all around us: Americans eat out more, retire earlier, own more cars, and send more kids to college than they did thirty years ago. They have iPods, Internet, laptops, cell phones, cable TV, DVDs, and eBay. More Americans own microwaves, multiple cars, dishwashers, color televisions, and air conditioning. Despite what movies like Office Space claim, working in a cubicle is cleaner, safer, and more pleasant than a factory floor. Health costs are increasing in part because we now have procedures that simply weren't available twenty or thirty years ago. Arnold Kling argues that a key problem with health care in the U.S. is that we have too much expertise, calling it a Crisis of Abundance.
Income data is certainly not nothing, but it's hardly enough to tell us what's really going on. Economies fluctuate, a reality people only seem to acknowledge when they does well. But the fundamentals of the economy are still good, so let's all take a breath and remember the trend is still overwhelmingly upward and the bad times are still brief and rare.
HT: Rhett Butler