Apr 9 2008 8:20AM | Permalink | Email this | Comments (0) |
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Interesting article in the New York Times today. The reason this recession has the potential to be so bad is that for many people the last one essentially never ended. If you were middle class in 2000, you're probably worse off today than you were then:

In 2000, at the end of the previous economic expansion, the median American family made about $61,000, according to the Census Bureau's inflation-adjusted numbers. In 2007, in what looks to have been the final year of the most recent expansion, the median family, amazingly, seems to have made less — about $60,500. This has never happened before, at least not for as long as the government has been keeping records.
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More than anything else — more than even the war in Iraq — the stagnation of the great American middle-class machine explains the glum national mood today. As part of a poll that will be released Wednesday, the Pew Research Center asked people how they had done over the last five years. During that time, remember, the overall economy grew every year, often at a good pace.

Yet most respondents said they had either been stuck in place or fallen backward. Pew says this is the most downbeat short-term assessment of personal progress in almost a half century of polling.

You can read the full article here. 

This is the big reason that so much of the remodeling work in this country is being done by the richest people. According to Harvard's Joint Center for Housing Studies, by 2005 5% of households were accounting for 60% of the remodeling activity in this country. I interviewed Kermit Baker, director of the Remodeling Futures program, about this last year (full article here):

Well, it’s not a good thing to build an industry around. In 1995, the top 5 percent accounted for 45 percent of the market, so there’s always tended to be a significant concentration in a small group. However, it’s not healthy to rely on a small portion of the population over the long term, to the extent that we’ve seen over the last few years. We actually saw a decrease in the percentage of homes undertaking improvements from 2000 to 2005. 

By the way, it also looks like the homeowner relief bill in the Senate is in trouble. You can read more about that in the Times, too.