News articles this past week have been following President-elect Obama's statement that things in the economy will get worse before they get better, a statement which he repeated on Meet the Press yesterday. I expect that this news isn't a surprise to most of us. I know I've written about the state of the economy on this blog on many occasions over the past three years (Here are just a few examples). But the fact that Obama's willing to say so now is important. Leaving aside the cynicism that it would have been nice if he could have been so forthright during the election cycle itself, it's still the right thing to say if it does indeed reflect the reality.
Naturally, I think that this situation has gone on for long enough, and I'm more than ready for the economic nightmare to be over. I think that most of us feel the same. But since the situation has been building for so long now, it's unreasonable to assume that it will end quickly, and matters will only get worse if we don't prepare for the difficult times ahead.
I can imagine that some people are reading this and thinking "people are always short on money, this is nothing new." I don't know how many people are thinking that, but I'm sure that they're out there. But things are bad now in a way that they haven't been always. Maybe people my age are more able to recognize this. As Carol Howard Merritt notes in her book Tribal Church, "In 2000, the median net worth of someone over sixty-five was... fifteen times the net worth of households headed by those under thirty-five."1 And it's not just because those senior citizens have had more time to accumulate wealth, either. Those same people had incomes that were higher (in relation to the value of the dollar 30 years ago) than what current young adults are able to make, on average.2 And we haven't even gotten to talking (again) about how much more housing costs have risen, nor how education costs have gone up, leading naturally to greater debt before people even enter the work force! And with unemployment rising, it's even harder for people to find a job that increases their earning potential. If people are at all like me, we're glad to even have a job, even if it doesn't pay anything like what we feel we should be earning for our talents, abilities, and efforts.
There's no easy solution, but I am glad that Obama is talking about building infrastructure: roads, schools, and so on. I've seen others argue for infrastructure before, and the argument for more infrastructure makes sense to me. It may seem counter-intuitive to be spending more money when there's so much debt, and when the government is spending so much on so-called "bailouts" that have yet to help the average person more than the corporations responsible for so much of our trouble themselves--and I do repeat my assertion (agreeing with Reich in the link above) that we need a lot of this infrastructure to be done on the local level, and not just the federal one--but now is the time when we need this infrastructure spending the most! While it may well "get worse before it gets better," it won't "get better" for that much longer if we don't invest in this kind of growth sooner rather than later.
1Quote from p. 63 of Merritt's book. She cites Generation Debt by Anya Kamenetz, p. 158, as her source for this info, with the following specifics from Sam Roberts in Who We Are Now, p. 179: "the net worth for those younger than 35 was $7,240 and $108,885 for those over 65."
2Here is one of several interesting statistics from Mary Ellen Slayter, "It's Harder for Your Generation," appearing in The Washington Post on November 26, 2006 (This link will get you an abstract, but you'll have to pay for the full copy unless you're in an academic network that provides it by another means): "Inflation-adjusted earnings for males age 25 to 34 with a high school diploma dropped from $42,630 in 1972 to $29,647 in 2002. Their college-educated peers saw their earnings slide from $52,087 to $48,955."