It is already a lost decade

By Dave Anderson:

The head of the European Central Bank is worried about a lost decade. [h/t Calculated Risk].  For middle class Americans, we have already experienced a lost decade and could be looking at a lost generation.

From MarketWatch: 'Lost decade' possible for global economy, ECB's Stark says

"The failure to address long-overdue reform challenges promptly might result in a 'lost decade' for the global economy," Stark warned Monday ... "Only partial progress has been made so far, and the distortions that led to global imbalances are still present."

Tim Duy has calculated an interesting income series of inflation adjusted income that excludes government transfer payments in the United States.  He then compares those results against trend.  His data set is good until December 2007 so it excludes the greatest impact of the current recession. 

Just as the credit crisis and the housing bubble were starting to explode in late 2006 and early 2007, incomes had fallen dramatically.  And they have taken a harder hit since then.  For the decade, income excluding transfer payments (Social Security, unemployment, tax rebates) are several thousand dollars below trend.  

And these numbers do not take into account distribution by income quintile or age.  We know that the top 1% and the Top 400 families in America were still seeing income gains until the stock market crash.  I would speculate that this data set would show even greater income losses per capita for the bottom 80% of the income distribution and probably for the bottom 90% of the income distribution.  

This weekend, Ron asked why there was such a disconnect in approval ratings for Obama by age.  People under 30 approve of Obama at a significantly higher rate than any other age group.  There is a slight negative correlation between age and approval ratings for the other groups but nothing strong, but the youngest voters have very strong approval ratings for Obama.  Ron argues in part that younger voters are not consumers of the Republican Scream Machine political information push system, but I think these numbers are another part of the story.  

For most young people, I think they have either already experienced a lost decade as the labor market for 20-somethings has never been a booming one unlike the one that I and other older Gen Y'ers saw just as we were entering college, and current college kids and recent graduates are looking at a bleak landscape.  

As a generation, the 18 to 29 year cohort is seeing increasing fixed costs of entry into the middle and professional classes, housing costs that shut out quite a few people from buying, one unpopular war, a broken political system, environmental catastrophe potentially looming, and piss-poor wages.  

The American Dream of doing better than our parents and seeing our kids have the opportunity to do better than us is a joke or at least no better than a lottery that is heavily weighed to the already privileged and well-connected during the entire adult life of Generation Y.  

That was the background of 2006, 2007, 2008, 2009 and 2010, change still sounds good because otherwise my generation is looking at a lifetime of being shafted.