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The Economy We Lost

Updated: Sep 22


(Carlo Allegri/Reuters)

By ROBERT VERBRUGGEN


This year has been an awful one, and we’re all fully aware of that fact. But what too few of us appreciate is how good we had it beforehand: For all our whining, 2019 was a great time to be alive and living in the United States.


A fresh batch of reports from the Census Bureau demonstrates this nicely: COVID-19 destroyed everything it touched, including the bureau’s own operations, but last year American society was as rich as it had ever been.


Every spring, the bureau conducts what’s called the Annual Social and Economic Supplement, which collects especially detailed information about Americans’ financial well-being the previous year. This year, interviews started on . . . March 15, right as it was dawning on Americans how serious COVID-19 was. The bureau suspended in-person interviewing, closed its “Computer Assisted Telephone Interviewing Centers” to protect staff, and conducted all interviews by telephone. As a result, the survey ended up with an unusually high degree of “nonresponse”: It reached nearly three-quarters of the folks it tried to contact, but that’s a ten-point drop from what it usually achieves.


The people who did respond were disproportionately richer, too. The census always makes statistical adjustments to account for such problems, but this time, the standard techniques weren’t enough. Though the bureau unfortunately stuck with those techniques for its official reports, it also released a separate paper that makes further corrections to the data.


The official statistics — including a whopping 6.8 percent increase in the median household income between 2018 and 2019, even after adjusting for inflation — seem too good to believe, because they are. But the fully adjusted numbers still tell a fundamentally positive story. Before COVID, life in America was gradually but tangibly improving, no matter how much we liked to complain about everything.


The adjusted numbers, for instance, still show about 4 percent growth in the median household income, from about $66,000 to a record high of $68,500, which represents an improvement on weaker growth the preceding two years. What’s more, the gains were widely shared, with more than 3 percent growth across pretty much the entire income spectrum.


Here’s the longer trend, with the caveat that the 2019 value is from the official data, not including the COVID adjustments. The early 2000s and the Great Recession were not great by this metric, but the past half-decade or so has been amazing:


Poverty dropped, too. Using the official measure, which does not take account of non-cash benefits such as food stamps, the poverty rate dropped by nearly a point, to about 11 percent — a healthy fall compared with the half-point declines the preceding two years. Using the far superior “supplemental” poverty measure, which uses a broader definition of income and makes other technical improvements as well, poverty fell about a half-point, to 12 percent, roughly in line with the improvement this measure has been showing recently:


To top it all off, many argue that these trends aren’t quite sunny enough, because the Census Bureau uses an overly aggressive measure of inflation.


The numbers for 2020, of course, are going to bear the mark of COVID. Some early data suggested that poverty was actually down thanks to the government’s generous response to the pandemic, but the trend has reversed over the past two months. A big boost to unemployment benefits has expired, and the president’s smaller replacement scheme is running out of money. Businesses are going under, and while various measures of economic chaos are improving rapidly, they still have a long way to go before they get back to where they were.


As I recently pointed out on the Corner, we’ve gained back only about half of the losses we sustained to jobs and the unemployment rate earlier this year. The latter was still above 8 percent in August, more than double its value at the beginning of the pandemic. Meanwhile, the CBO projects that the economy will grow quickly for a while — especially the second half of this year — as everything comes back online, but that it will take about a decade to get all the way back to our previous trajectory, given the sharp contraction we experienced in the second quarter.


Still, we Americans live in one of the most prosperous countries in the world, and an improving country at that. We can complain about the misery of 2020 and the challenges ahead; I certainly do. But the small, almost imperceptible year-to-year improvements the census has documented add up greatly as the decades pass, and perhaps we should do more to appreciate how good we have it most of the time.


ROBERT VERBRUGGEN is a policy writer for National Review.


Read original article on National Review.

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