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PESSIMISM about the United States rarely pays off in the long run. Time and again, when Americans have felt particularly glum, their economy has been on the brink of a revival. Think of Jimmy Carter’s cardigan-clad gloom in the inflation-ridden late 1970s, or the fear of competition from Japan that marked the “jobless recovery” of the early 1990s. Both times the United States bounced back, boosted on the first occasion by Paul Volcker’s conquest of inflation and on the second by a productivity spurt that sent growth rates soaring in the mid-1990s even as Japan stalled.
That record is worth bearing in mind today. Americans are unhappy, and becoming more so, about their country’s prospects and politicians’ efforts to improve them. In a new New York Times/CBS News poll, seven out of ten respondents said America is on the wrong track. Almost 60% of Americans disapprove of Barack Obama’s handling of the economy, and three out of four think Congress is doing a lousy job.
This malaise partly reflects the sluggishness of the recovery. Though unemployment has been falling and share prices are close to a three-year high, house prices are still in the dumps and the price of petrol has soared to levels not seen since the summer of 2008. But it’s not all about oil or indeed the short term. A careful reading of the polls suggests that Americans’ worries stretch well beyond the next couple of years: about stagnating living standards and a dark future in an economy slow to create jobs, saddled with big government deficits and under threat from China. Tellingly, a majority now regard China, not America, as the world’s leading economy.
Are these worries justified? On the plus side, it is hard to think of any large country with as many inherent long-term advantages as America: what would China give to have a Silicon Valley? Or Germany an Ivy League? But it is also plain that the United States does indeed have long-term economic weaknesses—and ones that will take time to fix. The real worry for Americans should be that their politicians, not least their president, are doing so little to tackle these underlying problems. Three failings stand out.
