In the attached essay Robert Samuelson examines the degree to which the economic downturn has impacted American attitudes politically and economically.
Though my bet is Mr. Samuelson and I would disagree on some important economic points, I think he is absolutely correct in saying that the prosperity which many Americans just took for granted for generations isn’t taken for granted by middle America anymore. Confidence has been shaken in our economic and political institutions. Americans, even if they are not immediately in danger of losing their jobs know that another downdraft could take them with it and it worries them.
To the degree that such a general concern encourages people to save more and to be generally more frugal – especially as it relates to personal debt, this is good. People are shoring up their vessels. Many middle class Americans are trying to patch holes in an effort to be better skippers of their households. I believe that this is a current and quiet trend in suburbia.
Despite the Fed doing everything it can to discourage savers, at least some people are now more keenly aware that a bird in the hand is often worth much more than 2 leveraged birds in the bush, even with historically low interest rates.
(From Real Clear Markets)
Americans are defining prosperity down, to paraphrase the late Daniel Patrick Moynihan. They are aligning attitudes with experience. The consequences are profound for our economy and politics. Judging themselves more exposed to business cycles, Americans have become more hesitant and precautionary in their spending. These worries and the resulting restraint are both a cause and consequence of the weak recovery.