Was it the lost decade? Not entirely.
Compared to 10 years ago the average American is earning about $5 an hour more, but unemployment has tripled, single-family home sales are 34% lower, and stocks are down 8%. Yet, some see signs we're doing better economically. Bob Moon reports.
Demonstrators protest against bailout funds outside of a Bank of America branch in Washington, D.C., in April 2009. (Mandel Ngan/AFP/Getty Images)
More on America's Financial Crisis
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Kai Ryssdal: There are two big ways to approach an economic story. One is to go purely by the numbers. And on that score maybe we're really not doing much better now than we were at the end of the 1990's. Almost three times as many Americans are unemployed now as then. The number of single-family homes sold this year is 34 percent below the number sold in 1999. The Dow, as I mentioned, closed at almost 10,500 this afternoon. On this day in 1999, the blue chips were a 1,000 points higher. The other way to do business news is to talk about how people are feeling about the economy. And there we're not doing too badly. Here's our senior business correspondent Bob Moon.
BOB MOON: Americans might feel like they've just been running in place, but most are wealthier than 10 years ago. We've had two booms and a big bust, but let's not forget the stock market's current level was widely considered to be overheated at the end of the 1990s.
The way Boston College economics professor Harold Petersen sees it, the economy has spent the last decade just catching up.
HAROLD PETERSEN: What we've lost is illusion that we get in a boom. In one sense, yes, we've lost a lot. But it was money we never had, really.
Petersen concedes millions have lost their homes, jobs, and even prospects for retirement. But he says we've also gained a valuable lesson -- that we need to save.
PETERSEN: People began to believe they didn't need to save for retirement -- the rise in our 401(k)'s would take care of them; the rise in our home values would take care of them. So the savings rate plummeted virtually to zero. In other words, their expectations for retirement were based upon an illusion.
That's not the only knowledge gained.
Charles Geisst is an economics historian at Manhattan College.
CHARLES GEISST: I think most people are now -- even those who aren't well attuned to financial developments -- I think are starting to understand that the deregulation which was so ballyhooed in the late 1990s was probably not a good idea.
Geisst warns that without serious regulatory reform there's a real threat the "lost decade" could be the one yet to come.
But Boston College economist Harold Petersen believes the last decade could also have set the stage for better times. We're producing more per hour worked, and Petersen says that's bound to bring higher profits and better wages.
PETERSEN: If wages rise more rapidly, we're more easily able to take care of Social Security and Medicare, because the payroll tax brings in more. Profits rise, we'll do better with our 401(k)'s and our pension plans. So productivity growth is the key to our future economic prosperity.
And here's to a prosperous New Year.
In Los Angeles, I'm Bob Moon for Marketplace.
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From Colorado Springs, CO, 12/31/2009
Bob Moon:
"Compared to 10 years ago the average American is earning about $5 an hour more,..."
Can you do a comparison of the average pay of Americans minus top 10 percent of earner compared to 10 years ago with and without inflation effects?
Thanks.
12/31/2009
How about comparing to 1961 to 2006? 'Is Our Tax System Helping Us Create Wealth?' by David Cay Johnston (summarized in Economist's View 12/31/09) http://economistsview.typepad.com/
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