Nor can the revenue growth across nearly every sector for hundreds of major companies be attributed only to thousands of millionaires and a handful of billionaires doing quite well. National chains as varied as Starbucks, Michael Kors, and Limited Brands, along with consumer and technology companies such as Apple, Amazon, Netflix, and a bevy of others, are seeing high-single-digit and often double-digit revenue growth. Such growth is widespread, and indicates at the very least that a substantial majority has income to spend beyond what is needed for basic needs.
Most of these companies are mass-market enterprises serving tens of millions of people, and those people are spending. And they are not spending on borrowed money, judging from revolving debt statistics (i.e., credit cards and the like). In fact, overall revolving debt is about 15 percent less than it was in 2008, according to the Federal Reserve. Yes, some of the growth of these companies is international as well, which means that the story of healthy growth is not just an American one.
There is no easy explanation here. For now, there is a genuine paradox between multiple inputs showing clear and widespread improvement in economic life—including modest income growth—and clear and widespread conviction that there is not much improvement.
But one final piece of information may provide a clue to why. Last year, the stock market, using the S&P 500 as a proxy, rose by more than 30 percent, but only 7 percent of investors realized it. In fact, 30 percent of those surveyed believed that the markets were either flat or went down. And these are investors, people who are putting their money in the markets and have money to invest—already a rather privileged slice of the population. Yet that cohort was widely off the mark about how stocks have performed.
From privileged investors to the wider middle class, there is a gap between perceptions and how the economy is performing. We have been living through a relentlessly negative period in which political crises and negative economic news are trumpeted daily, and in which warnings of a new crash, another collapse, and long-term economic stagnation—or worse—proliferate. It is difficult to integrate a gradually improving set of numbers when the prevailing sentiment is so grim.
That grimness may be understandable. The U.S. labor force has morphed from the manufacturing jobs familiar in the 20th century to a shifting mélange of self-employment and service-sector jobs with fewer benefits. The political class seems unable to craft coherent and helpful policies. And whatever veneer of certainty about the future that existed in the last decades of the 20th century was shattered by a wave of crises beginning with 9/11 and extending through much of this new millennium.
Nonetheless, the lattice of data—from unemployment to growth to income to the revenue growth of companies—is not in sync with grim sentiment. The fact that many millions are dislocated or faring badly cannot be ignored, but nor should other facts that present a different, much more positive picture. Those facts matter, and they need to shape our sense of the economy. We are collectively in thrall to our legitimate sense that much is uncertain and not working well, but that must be leavened by considerable evidence that for now, things just aren’t as bad as they seem.
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