America’s economy: glass half full?

By Chrystia Freeland
June 24, 2011

Is it morning in America? Or is now a time for blood, sweat, toil and tears? As the United States warms up for the presidential elections, the choice between those two narratives will be the most important decision each party makes and may determine who wins in 2012.

Both are ways of talking about the economy — the issue that polls show overwhelmingly preoccupies U.S. voters. The morning-in-America storyline is that the financial crisis is over, the economy is healing and the country’s innate powers of renewal, reinvention and innovation are already asserting themselves. The blood, sweat, toil and tears view is that the U.S. economy is still sick and that it will take a significant, arduous and collective effort to nurse it back to health.

For now, the White House is committed to morning in America. That was the message of a discussion among members of the President’s Council on Jobs and Competitiveness that I moderated this week at the New York Forum, a high-powered annual gathering of CEO’s and politicians that is shaping up to be New York’s answer to Davos.

The most influential voice on my panel belonged to Valerie Jarrett, a senior adviser to President Barack Obama. Mrs. Jarrett has worked as a lawyer, chief executive and Chicago City Hall heavyweight. But her most important qualification today is as the confidante, consigliere and best friend of the Obamas, whom she first got to know two decades ago when she interviewed the future first lady for a job and wound up meeting her fiancé, too. Mrs. Jarrett has the president’s ear, and his back — and she is always on message.

That’s why her determined good cheer at the forum matters. “We have good reason to be optimistic,” she said. “We have great entrepreneurs and the capacity to reinvent ourselves. This is still the best country on earth.”

The other panelists, all members of the Jobs and Competitiveness Council, faithfully chimed in in the same key. Brian L. Roberts, chairman and chief executive of Comcast, the cable giant that recently acquired a majority stake in NBC, said a positive outlook was essential to “make America a great place to live and work. We all want that to be the outcome, so it’s critical to have a sense of optimism.”

Robert Wolf, chairman of UBS Americas, and one of Mr. Obama’s earliest supporters on Wall Street, agreed, and accused the news media of painting an overly bleak picture of the economy: “Since I sat here a year ago, we have two million jobs that have been created,” he said. “Exports have gone up by 10 percent and technology is booming, agriculture is booming. But when you look at the TV you hear what we are not doing well. I believe we have built a foundation and are on the right path.”

There are a lot of good reasons for the White House’s determination to tell us the glass is half full. For one thing, even though this president isn’t from Hope, from the very outset, hope has been central to his personal brand. That has been a smart choice — Americans are a generally cheerful folk and it has long been a political truism that the sunniest politician is the one who wins.

Perhaps more importantly, two and a half years after taking office, Mr. Obama owns the U.S. economy. That gives him and his backers a powerful incentive to cast it in the most positive light.

Finally, this is a White House of wonks and one of their chief enthusiasms is for behavioral economics. They have all read George A. Akerlof and Robert J. Shiller’s Animal Spirits — a book whose title refers to John Maynard Keynes’s famous line that markets are governed not just by hard data but also by the animal spirits of their participants — and they understand that confidence can be a self-fulfilling prophesy.

These are three powerful arguments for official optimism. But the strategy could go very badly wrong if the public doesn’t buy it. And so far, people don’t. The Rasmussen survey this week showed that just 26 percent of likely voters thought the United States was headed in the right direction; 65 percent think the country is on the wrong track.

That pessimism is the product of more than the TV shows Mr. Wolf excoriated: unemployment is still above 9 percent and more people than ever told Rasmussen that their homes were worth less than their mortgages. A separate poll, by Gallup, revealed that even people with jobs think now is a bad time to find good work: 86 percent of respondents said that now is a bad time to find a “quality” job. That number jumped to 93 percent for college graduates. Before the recession — in January 2007 — it was just 47 percent.

That grim view suggests that, notwithstanding their cultural inclination toward optimism, Americans today may not be in the market for happy talk. We may be at one of those rare historical crossroads when voters realize their country is in trouble and they prefer the leader who offers a bleakly honest diagnosis to the one who says everything is OK.

That was the magic of Winston Churchill’s famous “blood, toil, tears and sweat” speech. “We have before us an ordeal of the most grievous kind,” he said on May 13, 1940, in his first address to the House of Commons as prime minister. “We have before us many, many long months of struggle and of suffering.”

At the wrong moment, the audacity of hope can sound a lot like denial. Mitt Romney, the Republican front-runner, is already making that point. A Romney campaign video released earlier this month mocks the president’s assertion that “there are always going to be bumps on the road to recovery,” arguing that the 20 million Americans who have lost their jobs can’t be dismissed as mere bumps in the road

And so, the big question of the next year is this: do Americans want someone to reassure them they are still great or someone who admits things are awful?

24 comments

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I want someone who will tell the truth which neither party does. Wether it be a Democrat or a Republican: neither party confronts problems, gives us honest facts, or has a plan to help the average person or family. Instead they play games with the deficit and give all aid to their select friends.

Posted by ajwidget | Report as abusive

They use economy as a tool to help themselves gain political power without looking after the benefits of the people of this great nation except the wealthy few.

Posted by mcright | Report as abusive

In March 2011 I hosted a panel of economic and market experts here in NYC. All of them, except one, had a rosy picture for the US and the stock markets, saying in short that the road to recovery was intact.

HOwever, when I asked about the impact of state and local government budget and job cuts looming throughout the country (and pointing out that it was public sector payrolls that had kept the US out of a Great Depression), one by one these experts admitted that it was going to be a challenge for the private economy to pick up the slack in face of huge government cutbacks.

That is exactly what we are seeing today. Republicans and certainly most of the Senate Democrats are insistent that the low tax rates on 1099 income (cap gains, dividends, interest, derivative income, etc.) of 15% and lower must stay – even at the expense of middle class jobs. Add to that the rant of conservative think tanks about lowering the Federal corporate tax rates even though many of the largest corporations in the US are realizing an effective tax rate under 5%.

Obama, the Senate, along with the US CHamber of Commerce continually look to the mega corporations for job growth – and thus rationalizing the huge tax breaks (off shore income holidays, etc.). THis is in face of the stark reality that for over 30 years US job growth is coming from companies with less than 100 employees.

Posted by Acetracy | Report as abusive

I’m skeptical of a Republican like Romney who casts himself a champion of the poor and unemployedin this country. Republicans have worked tirelessly to prop up the rich and megacorps by so fiercely opposing healthcare reform tax reform.

Posted by wakeuptime | Report as abusive

Without a savior like Bachmann, the USA is toast. With a Bachmann we may be toast anyway but we have a chance.

Posted by Truth_Teller | Report as abusive

Tell the truth and shame the devil and as usual the devil is in the detail!

Does the US political system have many/any politicians who will speak the truth? Only those who can demonstrate they do, should put themselves forward for President.

The deficit problem will not go away, start the truth process by agreeing on that simple (horrible) fact.

It saddens me to watch this shambles taking place and everyone that matters (the ordinary people of the USA) are so powerless to change the political landscape.

The problem started at the top but as usual those at the bottom have to pay the price i(if any) suffered by the upper echelon.

The whole thing (US economy/politics) is substantially dishonest. It reminds me of a quote I read some time ago “oh what a tangled web we weave when first we practice to deceive”

Deceived, ‘you all are’.

Posted by Tommyuk | Report as abusive

The elites represented at the New York Forum breathe rarified air that is completely disconnected from reality.

Why bother giving these hacks, that have run the US economy into the ground over the past 30 years, a forum to spout their propaganda in the first place?

Their game is to continue fleecing the public through monopolistic or cartel practices, with a an ever-increasing menu of tax cuts, tax credits and tax avoidance.

We need a US version of Tahrir Square to purge these parasites.

Posted by upstater | Report as abusive

Our Government lawmakers make the rules that we and corporations abide by. For the past 40 years the President, Senate and US Chamber of Commerce via their policies have done nothing but inhibit job growth and encourage outsourcing. The systematic spreading of America’s wealth to the four corners of the world is deflating the USA. Every politician (and some smart citizens) knew this would happen as it doesn’t take a genius to read the handwriting that’s been on the wall for 40 years. Thing is, our lawmaker’s wanted this and everything is happening exactly the way they intended so don’t even think that any real solution will be forthcoming. Expect lip service, fodder for the masses.

Posted by GLK | Report as abusive

Oh of course it is over. I am not American (thank heavens). For the first time in my life most people I meet do not want to be American.

A country that is like a stumbling giant that cannot even guard its own borders and who has arguably the most incompetent president in US history (though Jimmy Carter is still in there with a chance).

Poor souls – the world laughs at you and all you worry about is gay marriage that 5.5 billion in the world disapprove of.

Posted by eleno | Report as abusive

All in 8 years: #10B/mo borrowed from China to spend $10/mo in Iraq, $10B/mo borrowed to pay $10B/mo to HMO’s [insurance companies] to deny benefits and scrape additional profits, in Medicare Part D, and pay pharma double the value of drugs, millions of $’s in tax revenue sent overseas in the form of jobs, while giving corps. [now persons] tax breaks for sending the jobs. $10B/mo less in tax revenue reducing the tax code on income, from a near balanced budget to a reported $14 trillion deficit when all wars are put on the books. Can someone tell me how this deficit is going to be reduced without increased revenue [taxes] when the interest alone is more than so called “discretionalry spending?

Posted by educationfan | Report as abusive

Just read an artical which makes the best sense I have heard for the US situation, try it.

http://blogs.reuters.com/reuters-wealth/ 2011/06/24/economy-revival-bond-barons-s ay-spending-is-the-answer/

The first link is brilliant.

Posted by Tommyuk | Report as abusive

Glad to see the ‘average’ American is waking up. After 60 years of unbridled hubris and conspicuous consumption it may finally be dawning on citizens that things can’t continue as they were.

Posted by wyldbill | Report as abusive

There is no common sense, intelligent compromise, calls to experts for input or rational behavior being displayed by the idiots in the federal government responsible for our countries fiscal stability. With a fiscal crisis like we face, the congress goes on vacation. It is apparent we have the wrong people taking up space that would be better served by someone else in both the legislative/executive branches. The lack of executive leadership with two days remaining before fiscal dooms day looms is a direct indicator of the ineptitude running rampant in the United States Government.

Posted by Wassup | Report as abusive

Every now and then, you do some good thinking. This was a pretty good effort. During my volkwanderung days my buddy and I came to the (70′s based conclusion) that Europe was twenty years behind the U.S. in technology deployment and twenty years ahead of us in social awareness. Right or wrong, I’ve always sort of held to that.

We were not going to continue to live at our historical level of consumption. U.S. wage growth stalled in 1973 and never restarted. The decades long party, both institutionally and individually, that followed came from borrowing against the future, and that always comes with a certain poignant inevitably attached.

I’d suggest you take a long step back and go for the bigger picture. Stiglitz has done some good, if slightly whiny liberal, thinking on this. Your Ukrainian farmer father has probably done some that is better – mine certainly taught me the value of dollar.

Oh, and Obama and the D’s Keynesian…, wow, big news item there.

Churchill didn’t say it but it’s generally attributed to him: “Who is not Liberal when young has heart, who is not Conservative when old has no brain”. We have arrived at our destiny.

Posted by ARJTurgot2 | Report as abusive

Like we know. The government did not stop making poor decisions until the economy could not be fixed. It is broken and the government does not know how to fix it.

Posted by fred5407 | Report as abusive

Republicans revel in gloom and doom because that mind-set serves their purpose of ensuring that they are elected in 2012. Republicans have obstructed and opposed any legislation which might boost the economy/jobs because that would be seen as a victory for the president.

I heard an interesting point this weekend….Republicans want to shrink the size of government and have attacked public sector employees as part of the problem. Much of the job loss has been public employees at the state and local level….yet Republicans are making an issue of the unemployment rate….pretzel logic.

Posted by bpotter110 | Report as abusive

Joedoright-where do you want to draw the line on the outsourcing ‘problem’? Our economy has been outsourcing jobs for 100+ years. Outsourcing stops the day the consumer stops buying better, faster, cheaper goods/services.

Posted by jambrytay | Report as abusive

Which party will find that delicate nuance of theme to convince the American people that they are less guilty than the other party for letting the wealthiest minority rob the US of it’s current and future value, and that it’s the average citizen’s job to rebuild the coffers, blindly neglecting any efforts to stop a repeat of the procedure.

Again.

Posted by hypodoche | Report as abusive

time for revolution

Posted by deerecub1977 | Report as abusive

Freeland could be one of those pundits that don’t offend anyone on one talk show after another. Maybe it is, or maybe it isn’t. Could be. Possibly. It’s all a matter of perception and worldview and political stance. Who knows the truth?

Where’s the basis in facts? Isn’t that the currency of professional journalists?

Posted by ptiffany | Report as abusive

I say the glass is definitely half-full, but I know there’s a segment of the population that LOVES THE GLOOM AND DOOM story Our economy has problems to be sure, but why are people drawn to the negative story? The picture with the headline says ‘The American Dream is Over’, that’ll undoubtedly attract a lot of attention for those needing their gloom and doom fix for the day….

Posted by jambrytay | Report as abusive

Evidently the times are so bad, that when I tried to encourage my nephew (who goes to a university and majors in the computer sciences) by simply suggesting he’s in a field that has good future prospects, I was severely criticized for “getting his hopes up”!

When I was in college many moons ago, I needed encouragement, which led me to an excellent career that survived this recession. It’s difficult to fathom the times are perceived as so bad, that simply telling someone “you have a bright future!” is considered cruel… that you’re “getting their hopes up” when in fact, they need to start emotionally preparing for a harsh and hopeless future!

It’s as if you can’t even pat someone on the back and say, “Don’t worry, everything will be alright!” without worrying someone will retort, “That is so cruel! Everything will NOT be alright! Stop encouraging that person!”

Imagine if Franklin D. Roosevelt had been castigated for his famous quote, “We have nothing to fear but fear itself” because everyone was so negative, their immediate reaction was, “You cruel bastard, we have EVERYTHING to fear!” And times were bad then, but evidently not as negative as now.

Posted by DisgustedReader | Report as abusive

I buy it. I also buy Santa Claus coming down my chimney and bunnies who lay eggs each spring. For once I think American’s are finally starting to see the truth, and it’s not a pretty picture from any view. The only possible way we’ll ever get out of this mess is if enough media can make us believe “everything’s coming up roses for you and for me.” Please do your own homework and learn not only what the up coming politicians are telling us they’ll do, but equally important, what they’ve already done. There’s got to be someone out there with some real morals who we can actually trust and respect – isn’t there?

Posted by forteinjeff | Report as abusive

Another good article by Chrystia! Got me thinking..
First I don’t think that fixing what’s wrong in a timely manner is within the realm of possibilities. And Americans don’t like waiting for those “quality jobs”. It is certainly understandable wanting quick relief from a too stressful situation, but my fear is that this next election will be full of false promises and delusions to satisfy the fears of those who think the country is moving in the wrong direction. Action inspired by fear is often destructive, always suspect. Yet a campaign can certainly be won by getting the “fear vote”. The fear vote isn’t about terrorists or communists this time. It’s about what is going on within our own borders. So I don’t think Obama can afford to paint a pretty picture, but that isn’t the “half” of it…. He needs to step up to the plate! He needs to raise his voice a bit and point out the ridiculous at the very least. No, he will say the glass is half full and the glass is half empty, and we won’t know where he stands in terms of planting his feet firmly, which makes everyone anxious. The country is going in what direction?

Posted by Sue4 | Report as abusive