The So-Called "Lost Decade"
Over the past year, I've heard a lot about the 2000-10 time period as being the "lost decade." The WSJ today has a headline, "Lost Decade for American Income." While inflation-adjusted median household income did decline over the period, there are a couple of important facts to keep in mind.
First, the starting point in 2000 was artificially inflated. Remember what you or your friends were doing back in 2000? On the heels of the internet bubble, companies were paying inflated salaries to employees because they were so flush with cash. It was only in late 2000 and into 2001 that this cash started to be depleted and salaries then fell into line with historical norms. Second, this measurement also measures pre-tax income. In my opinion, after-tax income is a better measure of individual family prosperity and the tax cuts put in place in 2003 effectively gave American families additional spending power. Third and most importantly, the majority of this income stagnation has occurred since the recession began in 2008/2009 and under a non-radical federal government, should reverse itself in the next year or two.
Liberals go one step further and call the whole decade "the lost decade," but this is absurd. U.S. GDP increased from $9.7 trillion to $14.4 trillion, which translates into a 48% increase over a decade, which is actually pretty good.
The bottom line is that while the Obama years have indeed been a disaster, the last decade actually was decent. Still, the best way to American prosperity is for the government to get the hell out of the way.
First, the starting point in 2000 was artificially inflated. Remember what you or your friends were doing back in 2000? On the heels of the internet bubble, companies were paying inflated salaries to employees because they were so flush with cash. It was only in late 2000 and into 2001 that this cash started to be depleted and salaries then fell into line with historical norms. Second, this measurement also measures pre-tax income. In my opinion, after-tax income is a better measure of individual family prosperity and the tax cuts put in place in 2003 effectively gave American families additional spending power. Third and most importantly, the majority of this income stagnation has occurred since the recession began in 2008/2009 and under a non-radical federal government, should reverse itself in the next year or two.
Liberals go one step further and call the whole decade "the lost decade," but this is absurd. U.S. GDP increased from $9.7 trillion to $14.4 trillion, which translates into a 48% increase over a decade, which is actually pretty good.
The bottom line is that while the Obama years have indeed been a disaster, the last decade actually was decent. Still, the best way to American prosperity is for the government to get the hell out of the way.
posted by Richie Rich | 8:22 AM
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