Dr. Dre on the radio, The Matrix on the big screen, The Sopranos on TV: The year 1999 was wonderful for many reasons, including economic ones.
That year, the median household income rose to a record level, a watermark that held for nearly two decades. (The average American family was poorer when Donald Trump was running for office than when Bill Clinton left office.) Wages were growing across the board—all kinds of workers were getting consistent raises. Productivity growth was strong. Wealth inequality was holding steady and far lower than it is today. The poverty rate hit its lowest point in years.
I could go on and on with the hard statistics: The share of workers with a college degree was climbing. The homeownership rate was booming. The stock market, booming. Consumer confidence was the highest it has ever been. The share of people employed was the highest it has ever been. Investor optimism was the highest it has ever been. The share of Americans saying the country was going in the right direction—also the highest it has ever been.
Things just felt like they were going well and getting better. High-quality televisions were becoming ubiquitous; cellphones beginning to replace pagers. The share of homes with a computer and an internet hookup was exploding, and the web was promising to change everything.
Now: Earwormy TikTok blips on the radio, warmed-over superheroes on the big screen (at least until Barbenheimer), Peak TV drowning us in okay content: 2023 is blah for many reasons. Roughly half the country thinks we’re in a recession or about to be in one. Consumer confidence is down, as is investor sentiment. Inflation is weighing on American families.
But I’m here to tell you that this is the best economy ever. Really. This year’s economy has now outpaced that of 1999, the previous best on record. It is growing more equitably than it has in years. American families are more financially secure and wealthier than they ever have been. Things are going great, I swear.
The labor market is flourishing, and not just for rich folks for once. The unemployment rate is at its lowest level in 60 years—jobs are more plentiful than they have been in a generation. Competition for workers has not only pushed earnings up—median household income is sitting near its brand-new high, one that is $6,000 higher than it was in the late 1990s. It has also pushed earnings up more for the lowest-paid workers than the highest-paid workers. The past three years have erased a quarter of the run-up in wage inequality created in the past four decades. Real wages for the lowest-paid workers are growing faster than they have since the 1960s. The country’s wage structure is getting more equal, not less.
Arindrajit Dube, a labor economist studying this “unexpected” phenomenon, told me that the country’s “job ladder” had broken about 20 years ago: Workers in crappy jobs found themselves stuck in those crappy jobs, unable to move up. “Starting around 2018 or 2019, you start to see the tight labor market bring back some health and dynamism,” he told me. “People are making more changes. The Great Resignation, the Great Reshuffle, whatever you want to call it—it means the market is working better. And it’s allowing people to leave jobs that are really bad.” As a result, workers report feeling more satisfied with their jobs now than at any point since the 1980s, and 4 million more people have full-time jobs (and 1.6 million fewer people have part-time jobs) than before the pandemic.
Improvements in earnings, along with the stimulus payments the government made during the pandemic, have helped lift millions of families out of poverty. The child-poverty rate has fallen from 12.5 percent to just 5.2 percent over the past three years. That’s the lowest level ever recorded. The share of people living in deep poverty and near-poverty has declined, too, and food insecurity is at its lowest-ever rate.
Bigger paychecks are helping middle-class families buy houses and build wealth. The homeownership rate was increasing faster than it ever had, until interest rates spiked a year ago; families in the lower half of the income distribution are more likely to own their homes now than at any point since the real-estate bubble burst in 2006. Most Millennials own property; the generation is starting to catch up with Gen Xers and Boomers in terms of net worth and household formation.
The economy has also delivered extraordinary gains for Black Americans. The jobless rate for Black workers is near a historic low, and the gap between the unemployment rate for white workers and Black workers is the smallest it has ever been. Black workers’ earnings are increasing rapidly too.
Measured in all sorts of more esoteric ways, American families are doing the best they ever have. The delinquency rate on loans is the lowest it has ever been. Real disposable income is the highest it has ever been. The personal-bankruptcy rate is at an all-time low.
So we have to ask: Why aren’t we partying like it’s 1999?
The most immediate answer is inflation. It is not only sapping folks’ paychecks (though earnings and disposable income are still up in inflation-adjusted terms). People just hate having to do mental math every time they fill up their tank or hit the grocery store. And consumers tend not to notice when things get better as opposed to worse: Inflation has cooled off considerably, and the prices of eggs, gas, used cars, plane tickets, and dozens of other common consumer goods are falling, but that fact has not seeped in for many families.
Then there is something I like to call the Wrong-Apartment Problem. The country’s big cities have added far too few housing units over the past few decades; now even rural areas have shortages. By one estimate, roughly half of Americans would live somewhere different if supply met demand; New York would be eight times as big as it is now, and San Francisco five times as big. Renters spend a larger share of their income on housing than they did in 1999, and rents have grown by 135 percent, whereas average incomes have grown just 77 percent. The country has an affordability crisis, with health care, child care, and rent eating up huge shares of family budgets.
Yet these statistics still underplay just how bad the situation is. People don’t spend what they can’t afford, and pretty much nobody can afford what they want anymore. Yes, we have more income, more disposable cash, and a better standard of living than at any other point in our history. But millions of us can’t live in the neighborhoods we want. We’re stuck in too-small, too-far-away accommodations, giving up on the dream of having a second bathroom or a third kid. This is why you get all the social-media nostalgia for the economic conditions of the 1950s, when many Americans still lacked indoor plumbing, but at least could live in Brooklyn or Somerville or San Francisco on a reasonable salary. We’re all stuck in the Wrong Apartment.
A third major element is inequality. Although lower-income Americans have begun narrowing the gap, that’s a very recent phenomenon. And the incomes of the very richest are still rising faster than anybody else’s. Even if living standards are improving, the sense that the gains aren’t being equally shared is noxious to our polity.
The political and media environments are surely factors as well. Today’s intense polarization pushes folks to hate the economy if they hate the president and love the economy if they love the president, meaning that Republicans just aren’t happy right now. “Partisan bias exerts a significant influence on survey measures of economic expectations, and this bias is increasing,” new research finds. Switch on the TV, and the world is a bummer, too: the climate catastrophe, war in Europe, threats to democracy at home, social-media frying our brains and ruining sex and hanging out, among other pleasures. What is there to be happy about again?
Be happy about this: For once, in terms of the economy, things are going well. They’re great. They’re as good as they ever have been. I promise.
