Saturday, May 1, 2010

PessimismWage Stagnation on the March

Via The Big Picture, an article on the recent consumer confidence release:
As can be seen from the chart, good times in recent years have produced less net optimism than in previous cycles, while bad times have brought more pessimism.

On its face, such a result would seem to indicate Americans are losing their optimism, but it may not be as simple as that.
Indeed, it may not be. One way to interpret these numbers is that people's attitudes have changed, and Americans are less optimistic than they were in the 70s. Another is that policy in the '70s made more effort to ensure broad-based economic growth and people are responding to objective measures like stagnation of wages for the bottom 90% of the workforce over the past 30 years. The fact that this article doesn't even contemplate the possibility that people might be less confident about wage growth because they haven't seen much wage growth is a bigger reason for doom and gloom than the actual consumer confidence numbers.
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