Uneasy Days for the Economy

Listening the other day to discouraging economic forecasts from Alan Greenspan and Larry Summers, I was reminded of the many polls showing that Americans worry their children won't have the same opportunities they did. To be clear, neither the former Fed chairman nor the former Treasury secretary was predicting recessions or even downturns. But there was little in their words to the National Association for Business Economics to suggest that brighter days are on the immediate horizon.

Their diagnoses and suggested treatments of the economy weren't exactly the same, but both nonetheless left the listener deeply unsettled. Summers argues that it's been a long time since the United States had "healthy, strong economic growth in a full-capacity economy." He argues against current government austerity measures, particularly at a time when the country—he asserts—desperately needs an increase in consumer demand. He also complains that regulatory and policy restraints have restrained economic growth, specifically pointing to the fact that no new oil refineries have been built in the United States in decades. Meanwhile, austerity has led us to a lack of public investment; Summers gives the example of the currently dilapidated Kennedy airport in New York, at a time when borrowing rates are under 3 percent, which would normally be the perfect situation for government to rebuild infrastructure.

Greenspan argued for the need for immigration reform, saying that deporting illegal immigrants would lead to our economy "falling apart." On the other end of the immigration spectrum, he said, the H-1B program for admission of highly skilled workers is important because "we can't staff the high-tech needs of our country with the kids coming out of our high schools." Yet, the prospects for immigration reform in the House, despite the backing of leading Republicans, are problematic at best, due to entrenched opposition within the GOP base.

At the same time, and more broadly, Americans are worried about where our country is—and seems to be—headed. A Wall Street Journal/NBC News poll in May 2012 asked, "Do you feel confident or not confident that life for our children's generation will be better than it has been for us?" Only 30 percent of respondents felt confident, while 63 percent indicated they were not. A New York Times/CBS News poll taken in January of this year asked, "Do you think the future of the next generation of Americans will be better, worse, or about the same as life today?" Only 20 percent said better, 53 percent indicated worse, and 25 percent said about the same. In late 2012, a USA Today/Gallup poll asked, "In America, each generation has tried to have a better life than their parents, with a better living standard, better homes, a better education, and so on. How likely do you think it is that today's youth will have a better life than their parents?" At the time of the poll, the public was evenly split, with 49 percent saying likely, and 50 percent indicating that improvement was unlikely. Results differed widely based on exactly how the question was framed, but at best, in what has historically been one of the most inherently optimistic nations, at least (roughly) half of the population is doubtful that things will be better for succeeding generations.

Putting the deep concerns of two of America's brightest economists together with a troubled, even apprehensive public, particularly one that is worried about the opportunities of future generations, brings to mind the word commonly attached to Jimmy Carter's presidency—"malaise." Although he didn't actually use the term, the sentiment from that time seems relevant today: A country that fashions itself as a "bootstrap" nation with boundless opportunities is now settled into an uncertainty about the future and about our role in the world.

A Gallup Poll recently asked Americans, "Do you think leaders of other countries around the world have respect for Barack Obama or do you think they don't have much respect for him?" Just 41 percent thought that foreign leaders respected Obama; 53 percent said they did not. Obviously, respondents' party affiliation mattered; among Democrats, 69 percent said Obama was respected by the international community, while 28 percent thought he was not. Among Republican respondents, only 19 percent thought he was respected, while 77 percent responded in the negative. Most important, among independents, only 34 percent said they believed Obama was respected, while 57 percent thought he was not—a pretty tough indictment.

With a presidential campaign to begin a year from now, one must consider how these fears and apprehensions may manifest themselves as Democrats and Republicans begin the process of selecting their nominees. While the current political environment is not exactly like what the country faced in 2008—after Lehman Brothers fell, the stock market crashed, and the recession became evident—2016, it seems, is shaping up to look more like 2008 than any other recent election year. This is likely to have a profound effect on the decision-making process for voters on each side, but it is impossible to tell now what those effects will be.