Sky Isn’t Falling On U.S. Economy

At Halloween, we entertain ourselves by telling scary stories.

And at this time of year, we do it again.

But instead of having friends in Freddy Krueger costumes jump out at us, we allow economic forecasters to frighten us with stories about the decline of the American economy.

Fortunately, most of the spooky predictions of the past decade have turned out to be wrong. The United States continues to be the world’s leading economic power, and the blood-in-the-streets forecasters continue to be wrong.

Of all the 1980s scare stories, the most popular may have been the one suggesting Japan soon would rule the world. Many book authors made careers out of insisting Japan’s aggressive economic style would overpower us in the 1990s.

Today the U.S. economy continues to be the world’s biggest and the stock market keeps setting records. Meanwhile, the Organization for Economic Cooperation and Development, a Paris-based think tank for economically advanced nations, has declared Japan’s financial conditions the least sound among the world’s top industrialized countries.

In Japan, the stock market has taken dizzying drops, the yen is declining, real estate has been depressed for five years, banks remain shaky and consumer confidence is low.

The predictions about Japan’s ascent weren’t the only faulty forecasts. Another scare story held that millions of American jobs would disappear in corporate “downsizings,” leaving unemployment brutally high.

Of course, many jobs have been lost in recent years, but many more have been created. What happened at AT&T in 1996 shows how this cycle of job destruction and creation works. Early in the year, the telecommunications giant began cutting about 7,700 jobs. But after the layoffs were completed by year’s end, the number of employees remained unchanged. Why? Because the company created new jobs in its wireless, Internet and local-phone operations.

With U.S. companies coming up with so many jobs, unemployment remains low at about 5.4 percent. No one would suggest that surviving a layoff is easy; losing a job may well mean having to sell a home, return to school or even make less money. That’s very traumatic.

Nevertheless, it’s silly to say this country lacks good jobs. Our “problem” is that we have such a vibrant, advanced economy that we have a hard time keeping up with the pace of change and the growing need for training. Change isn’t easy, but we should not confuse stressful times with economically bad times.

Besides worrying about job losses, the doom-and-gloomers have predicted:

That our manufactured goods would not be competitive in the global marketplace. In reality, the United States remains the world’s biggest exporter, with overseas sales shooting up 172 percent, to $786.5 billion, between 1985 and 1995.

That our living standards would decline in the 1990s. In fact, we are building much bigger homes than our parents did and are stocking them with more televisions, telephones, bathtubs, apparel and food. By any measure, we have more cars, garages and toys than any Americans have ever had.

Year after year, we hear stories about how the United States is declining, and year after year, this country continues to prosper.

Still, I don’t mean to suggest Americans have no economic concerns. We do have at least three very serious problems: the despair of the underclass, the rising cost of higher education and the aging of the population.

The poorest Americans increasingly feel cut off from the mainstream economy. We must do a better job of helping poor children see a future for themselves in the legitimate work force.

At the same time, we have to find ways to lower tuition costs so that all young people can get the educations they need to compete in the job market.

Finally, the government must stop wasting valuable time as the baby boomers get closer to retirement. We have to figure out how to pay for Social Security benefits 30 years from now before that bill comes due.

If we can inspire poor children, boost education and keep Social Security in the black, we should be in great shape in the next millennium. I predict we’ll find solutions.

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