Read a really interesting article in the FT this weekend about the reality of the American dream. When you understand this, you also understand what is behind some of the politics in the US and why this country has such deep, almost irreversible challenges.
This is not about long term recession, it is related to has been called the “Great Stagnation” which is a long term decline in the fortunes of most Americans, particularly the middle classes. The foreign picture of ‘middle class America’ is a result of watching TV shows like Desperate Housewives or Weeds, but the view of manicured lawns and teenagers all driving expensive autos to schools applies to less than top 10% of the population.
The annual incomes of the bottom 90% of US families has essentially been flat since 1973 – having risen by only 10% in real terms over the last 37 years.
In the last economic expansion which started in January 2002, ending in December 2007 the median US household income dropped by $2,000. This was the first time where most Americans were worse off at the end of a boom cycle, than at the start. Now, Americans have a smaller chance of swapping a lower-income bracket for a higher one than in almost any other developed economy – even Britain on some measures.
Perhaps the late George Carlin was right – “It’s called the American Dream, because you have to be asleep to believe it.”