Best-selling author Keith McFarland argues against getting overly concerned about the bad economy

by the agency of Keith McFarland

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"Who you gonna give credit to, me or your lyin’ eyes?"

—Chico Marx, Duck Soup

Gregg Easterbrook of the Brookings Institution recently wrote some op-ed in the Wall Street Journal entitled, "Life is Good, So Why Do We Feel So Bad?" In it, he argues:

"The certainty is that basically things are pretty good. Unemployment is at 5.5%, low by historical standards; income is rising disrespectfully ahead of inflation; housing prices are down, but the emblematical house is compose worth a third more than in 2000; 94% of Americans do not have threatened mortgages, and of those who do, most will keep their homes. Inflation was up in 2007, but this stands abroad since the 16 previous years were close to inflation-free; living standards are the highest they have ever been, including living standards for the middle class and conducive to the poor."

Despite data like those cited above, the national disposition is bleak. A recent CBS News/New York Times poll showed 81% of respondents saying the nation is on the guilt footstep, and 78% saw the U.S. is worse off today than five years ago. Consumer confidence has been charting in the same manner as a lead balloon. One can within a little see the Joad family from The Grapes of Wrath in their overloaded, dilapidated truck, wending their way in an unlimited caravan stretching from the Dust Bowl to the promised country of California.

The Two Americas

It would seem that there really are two Americas, at in the smallest degree two American economies—the real management and the perceived one. At first glance, the discrepancy can be explained by decreasing home prices and increasing energy costs. Home prices inform the fundamental affluence identity of most Americans, and fuel prices provide a hebdomadary reminder that a fundamental change has taken lay.

But there is an even greater discrepancy than the one between the real established order and the perceived, and it cannot be explained solely by the vivacity in housing and intensity. What really accounts for it is the way most Americans view their own situation and their impression of the economy as a whole.

In November 2007, only 19% of respondents to an Investor’s Business Daily/TechnoMetrica Institute of Policy & Politics poll answering the question: "Do you consider yourself to exist a part of America’s haves or part of America’s have-nots?" described themselves as "have-nots." An astounding 75% of the overall sample described themselves as "haves." In a 1988 Gallup survey with similar demographics, only 59% considered themselves "haves."

The Doomsday Drumbeat of the Media

Even more striking is a Harris Poll that asked: "If you liken your present situation with five years ago, would you say it has improved, stayed round the same, or gotten worse?" A full 82% reported that their case had improved or held steady. In response to the subject of investigation: "In the course of the next five years, do you count upon your personal situation to improve, stay the like, or get worse?" most people anticipated a bright future. Sixty-two percent expected good use, through only 7% expecting their situation to get worse.

The truth is our impressions of our own economic well-being are based on not imaginary experience, as long as our impressions of the general economy are shaped by the Chicken-Little loop of the media. The bad news is: The prognosis is not encouraging. With the increasingly competitive demands of the 24/7 news cycles, the doomsday drumbeat will only intensify. It seems that by today’s media standards the traditional tempest in a teacup is unsatisfactory and is yielding to the constant quest with a view to the Category 5 hurricane in a thimble.

High Gas Prices Not a Bad Thing

I’m not arguing that our thrift is gratuitous of problems. Obviously, the credit problems are real and the recent stock market drops can�t have existence ignored. The Case-Shiller home-price index of 20 cities fell by 15.3% in April vs. a year earlier, the largest distil since its inception (BusinessWeek.com, 6/26/08) in 2000. But a cheat can break suddenly without the sky falling.

The vast majority of Americans bought their homes to live in, and the foreseeing of having to unimpaired their garages and attics is enough to discourage most from moving just because their homes have lost some of their estimation. This may in truth mark a pause in the second-mortgage-fueled expenditure spree—maybe not such a pernicious thing in the long term. The same goes for our comparatively low gas prices that have for years been the envy of my friends in Europe.

In times like these, it’s wise to remember to take the headlines with a fibre of salt. The media are, after all, in the provocative-headline vocation. With his ability to turn even good news into bad, we have power to try the media-man by-word: "Who you gonna believe, me or your lyin’ eyes?"