Can I see another's woe
And not be in sorrow too?
Can I see another's grief
And not seek for kind relief?
-William Blake
Why are Americans feeling so depressed and hopeless? This is not a rhetorical question. I understand the unevenness of the so-called rally, but just as things seem to improve and start to look better on paper, Americans seem to have gone into the fetal position, bracing for disaster. Many Americans have mixed emotions over our economy… in fact, only 57% of Americans now see themselves as middle-class, down from 72% in 2008. I understand the logic, since real wages are lower, commodity prices are higher, and millions are no longer homeowners. Yet, how is it that the further we are from the throes of the Great Recession, the less confident we are about our current and future economic circumstances?
What Kind of Catastrophe Are We Preparing For?
How do we explain the recent positive signs of wages edging higher and greater job security? It is not just that we are feeling lousy; perhaps Americans have not taken notice of the improvements. We stopped spending in March and began saving more cash. The rate of savings was 4.1% back in December, now 5.7%. My question is: What scared us this badly?
Look at personal savings levels: it is as high as it was going back to December 2012. It is as if consumers are intuitively building a war chest and somehow bracing for the worst. Close to $760 billion is tucked away, and while there is not the expectation that people would go out and spend all their money, a fraction of that cash would match any phony stimulus plan and dwarf the limited impact of all the Fed money printing.
The jobs report will be released this Friday, and of all of its critical components, I think wages matter the most. Tonight, on my show, we will discuss the notion of an income-less recovery.