(Bloomberg Opinion) -- Since 1976, the pollsters at Gallup have been asking Americans on a not-exactly-regular basis whether they’re financially better off than they were a year ago. Last month, 59% of the 1,014 people they asked said yes, the highest such percentage on record.
This makes sense. Economic growth is plodding along at the same just-over-2% pace it averaged over the past decade, but after 10-plus recession-free years the unemployment rate is the lowest it’s been since the 1960s. Preliminary indications are that median household income rose at a healthy pace in 2019. Most Americans are better off than they were a year ago.
They’re not uniformly happy with the U.S. economy, with the Gallup Economic Confidence Index higher than it’s been in about two decades but well below the levels of the late 1990s. They do seem awfully happy about life, though, with 90% saying they are satisfied with the way things are going in their personal lives, another record.
Happiest of all are those with household incomes of $100,000 or more a year, 96% of whom report being satisfied. But even 80% of those with incomes below $40,000 say they’re satisfied, higher than the percentage for all Americans in the years just after the last recession and for most of the late 1970s and early 1980s.
As has been noted many times over the past few years, a big partisan divide has developed in perceptions of the economy. In January, 48% percent of the Republicans polled described U.S. economic conditions as “excellent” while only 3% of Democrats did. This divide is also apparent in answers about personal finances and happiness, but it gets smaller. Among Republicans, 76% said they were better off than a year ago while 43% of Democrats did. The gap in personal satisfaction was just 93% to 86%.
Part of what’s going on may be that we have reset our expectations. The 1960s were by most measures the greatest decade for economic growth and living-standard improvement in U.S. history. Of course the 1970s felt like a terrible disappointment. The current expansion follows on a decade-plus of going backward, with real median household income falling 9% from 1999 to 2012. With that in the rearview mirror, even pretty good can seem great.
I’m less equipped to evaluate how societal influences might affect measures of personal satisfaction, but the 1970s were certainly a time of wrenching change in how Americans lived — a sexual revolution, rising crime rates, a flight from cities — while the past couple of decades really haven’t been. Sure, there’s a lot of Sturm und Drang in public life, but at home it’s the golden age of television and of food delivery. What’s more, people with kids generally score lower on measures of happiness and marital satisfaction in the U.S., and families with children under 18 now make up only 26% of U.S. households, down from about half in the early 1960s.
Gallup also asks Americans whether they expect to be better off financially a year from now. Respondents to this survey turned much more optimistic about their financial futures in the 1990s, and have never really dialed that back. Even during and after the worst recession in three-quarters of a century, the share expecting better times in the coming year never dropped below 55%. It had gone as low as 33% in the late 1970s. Now it’s at 74%.
This doesn’t strike me as entirely rational. It’s true that the economy has — with the notable exception of 2007 through 2009 — become a lot less volatile, but by many measures individual finances have become riskier. Maybe we’ve just gotten used to that, and cope with it in part by erring on the side of optimism.
The fact that optimism is now at an all-time high also raises questions about its sustainability. It’s hard for me to look at charts like these and not think they’re headed for a fall. Still, it’s also hard for me to look at who is most optimistic about the coming year and not hope they’re right (no, not so much the Republicans, but the other three of the top four).
The past couple of decades, especially the aforementioned stretch from about 1999 to 2012, have not been great, economically speaking, for the young, for members of most minority groups and for those without college educations. A long, long economic expansion seems to have finally changed that. Let’s hope it delivers a few more good years.
To contact the editor responsible for this story: Stacey Shick at sshick@bloomberg.net
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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