The Patriot Post® · The Economic Glass Is at Least Half Full

There’s a lot of bad news about the economy these days.

From persistent inflation to high interest rates to a tight job market, we keep hearing how this generation of Americans is worse off than their parents or grandparents. It’s no wonder teens dread the future.

But there’s good news in all this doom and gloom. Really good news.

As Eric Boehm writes at Reason, “The Congressional Budget Office’s (CBO) latest report on American households’ income, released this week, shows that Americans are significantly wealthier than they were 30 or 50 years ago. Poorer households are earning more. Wealthier households are earning more. And, yes, that’s after adjusting for inflation. In fact, poorer Americans have seen the largest relative gains over the past few decades — a fact that is particularly inconvenient for populists on both right and left.”

The popular claim that only the top 1% are doing well in this economy isn’t reflected in the CBO report. People at the bottom of the economic ladder live much better today than they did 50 years ago.

Boehm writes, “As Scott Lincicome, vice president of general economics at the Cato Institute, pointed out after crunching the CBO’s data, the poorest fifth of the income distribution — that is, the 20 percent of American households earning the least annually — has seen its average household income climb by 50 percent since 1979. When government transfers and tax policies are taken into account, that same segment of the population has seen its income double over the same period.”

Compared to other countries, even in the first world, Americans enjoy comfort and material goods that people in the past couldn’t even dream about. Visitors to the United States marvel that teachers and blue-collar workers can afford multiple cars, computers, and cellphones.

“In plain English,” writes Matthew Hennessey at The Wall Street Journal, “when you have more money, and that money goes further, you’re better off than you used to be. Americans today have access to more and better stuff than our grandparents ever did. If you can’t see that, get your vision checked. Granted, life isn’t only about stuff. But stuff is a good proxy for standard of living, and ours has been rising steadily for generations. Not every country can say as much.”

Of course, we shouldn’t sugarcoat the reality that some individuals and families are struggling in this economy. Their situations sometimes get lost in the broad strokes painted by economists. Even people with good jobs and decent paychecks feel they’re falling behind. And during an important election cycle, public perception matters as much as the actual economic data.

Gallup’s annual Economy and Personal Finance survey, conducted in April, reflects some of Americans’ concerns.

Gallup found that “overall, affordability concerns dominate this year’s list, with combined mentions of inflation, energy, housing and healthcare costs — along with college expenses, transportation costs and childcare — far exceeding all other types of financial concerns.”

As for claims that the middle class is shrinking, the data shows why that’s a misconception.

According to the American Enterprise Institute, “Using an absolute definition of the middle class, we find that the ‘core’ middle class has shrunk, but only because more families have become upper-middle class over time. The upper-middle class boomed from 10 percent of families in 1979 to 31 percent in 2024, and its share of income doubled. The share of families whose income left them short of the core middle class fell from 54 percent to 35 percent. Claims of a hollowed-out middle class wrongly reinterpret widespread (if unequal) gains across the income distribution as rising insecurity and declining living standards.”

“American families up and down the income ladder have seen sizable gains over the past half century,” adds AEI. “Economic growth, greater professional opportunities for women, and a robust safety net have more than offset the decline of marriage. Claims that the middle class is ‘shrinking’ — and especially that it has hollowed out — are not helpful for understanding changes in material well-being.”

It’s easy to let sticker shock at the grocery checkout line or gas pump obscure the bigger picture. Inflation leaves an impression economic data can’t erase. But stepping away from social media doomscrolling and catchy headlines about economic woes helps put things in perspective. The job market is solid, wages are holding steady or even increasing in some sectors, and consumers feel confident about spending.

We can’t pretend there aren’t problems, and economists can cherry-pick both good and bad examples. But we still have many reasons to be positive and hopeful. All in all, the American economic engine is strong, and the old notion that we’re worse off than our grandparents is probably more perception than reality.