As a news story, the economy has been overshadowed lately by war abroad, a border crisis at home, and the escalating fight between President Barack Obama and congressional Republicans on a variety of fronts.
But in the long run of presidential politics, the economy is still pretty much the only story that matters, and, while there’s been some good news in recent days, there are plenty of troubling indications that today’s economic unhappiness will dominate our politics for years to come.
Yes, it’s a good thing the economy grew at an estimated rate of 4 percent in the second quarter of this year, even though it contracted at a rate of 2.1 percent in the first quarter.
And yes, it’s a good thing that unemployment is now at 6.2 percent – down from a high of 10 percent in October 2009 – even though that reduction partly reflects the discouraged jobless who have left the workforce altogether.
But the bad news is really bad. The Russell Sage Foundation recently released a report showing that for households right in the middle of the American wealth distribution, net worth has declined from $87,992 in 2003 to $56,335 in 2013.
For households in the bottom quarter of the wealth distribution, net worth fell from $10,129 to $3,200 in the same period. And for those households in the lowest 5 percent, the last decade was about falling deeper into the hole; their net worth went from negative $9,749 to negative $27,416.
That kind of damage is not undone in a year or two. “Through at least 2013, there are very few signs of significant recovery from the losses in wealth experienced by American families during the Great Recession,” the Sage Foundation study notes. “Declines in net worth from 2007 to 2009 were large, and the declines continued through 2013.”
The damage extended beyond those Americans in the middle and below. Although net worth grew for households at the top of the wealth scale, for those in the 75th percentile – well above the average – the Sage Foundation found that net worth declined from $302,221 in 2003 to $260,405 in 2013.
Much of the loss for all groups came from a steep decline in home values, but job losses and the depletion of savings hit hard, too. And the net worth news comes on top of Census Bureau data showing that median household income fell from $55,030 in 2000 to $51,371 in 2012. So households not only had to get by with less income, they also felt less of the security that substantial savings and home values bring.
“Economic anger is going to drive our politics for a long, long time,” said Stuart Stevens, the political strategist whose candidate, Mitt Romney, struggled to reach disaffected voters. “The 2014 races are more regional and have a lot of different factors, but I can’t imagine that the candidate who wins in 2016 won’t be the one who best speaks to this.”
• Byron York is chief
political correspondent for
The Washington Examiner.