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Posted by: Michael Mandel on May 17
Maybe it’s just me, but I’m getting flashes of deja vu from the NYT’s multi-part series on class, followed by today’s WSJ story on consumer debt, with the headline “Lagging Behind the Wealthy, Many Use Debt to Catch Up.” The story says
More and more Americans are turning to debt to pay for lifestyles their current incomes can’t support.
Sounds pretty horrible, doesn’t it? This deluge of high-profile negative stories reminds me a lot of early 1996, when the NYT ran its multi-part series, “The Downsizing of America.” In that case, the main point of the series was that corporate layoffs had
produced an unrelenting angst that is shattering people’s notions of work and self and the very promise of tomorrow.
Okaaaay…the similarity between now and 1996 is simple. In both cases there had been extended period of rising profits and weak wage growth. That’s what produces the higher debt levels, and not surprising, the sense of angst.
Of course, the 1996 handwringing was followed by the biggest real wage gains in more than 20 years, and the lowest unemployment rates since the 1960s. I’m willing to bet that real wages are going to start rising soon, and the angst will quickly leak away.
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.