News Journal: The hopeful sign is that we are becoming more hopeful

Five years ago, economists told us the recession was over.

Not many people agreed with them, and for good reasons. When you have lost your job, had to take another one for lower pay, or seen the value of your house sink below your mortgage principal, no supposed expert is going to convince you the economy is strengthening.

I don’t think a real-life recession is over until most of us believe it is. That’s why a recent Gallup poll is so significant. “A majority of Americans, 52 percent, say their financial situation is ‘getting better,’” according to the poll, “the highest percentage to say this since 2004. It is also the first time since the recession that this sentiment has reached the majority level… In every income group, the percentage saying their financial situation is getting better has increased from 2014.”

That’s great news. Because when consumers believe the economy is strong they spend more money. When business owners believe the economy is strong they build more plants and hire more people. Perception is just as important as reality.

Yes, there are still a lot of things wrong with our economy. But the new optimism of a majority of us is based on a lot of promising hard data. Unemployment, 6.7 percent a year ago, is 5.5 percent today, the lowest it has been since May 2008. There have been over 60 straight months of private sector job growth creating over 12 million jobs. The federal deficit has shrunk from 12.1 percent of GDP in 2009 to just 2.4 percent in 2014. The International Monetary Fund forecasts a healthy 3.1 percent growth rate in U.S. GDP in 2015. The rest of the world knows our economy is strong; the dollar has increased in value by close to 25 percent against an index of other major currencies.

That stunning increase in the value of the U.S. dollar is also a sign of how much better our economy is doing than those of other countries around the world. The 12 million jobs we have created in the past 60 months tops the jobs created in that time by all the other advanced economies combined. The IMF forecasts that the 19 countries in the Eurozone will grow in 2015 at less than half the U.S. rate. Japan expects only one percent growth in 2015. China’s GDP growth rate in the first quarter of 2015 was the weakest since the bottom of the financial crisis in the first quarter of 2009. Its economy has been slowing since 2011.

Will the trend continue? Looking more than a few months ahead is beyond my pay grade, and the economists who get paid to make such predictions always disagree. There are just too many moving parts in a complex global economic system, and too many unknown events that could affect what will happen. But for now, the consensus opinion is that the United States can expect a period of reasonable growth and modest inflationary pressures.

If that is so, I believe there will be political as well as economic ramifications. Because Americans have traditionally been optimistic, the wave of pessimism that swept through the country after the 2008-2009 financial crisis hit us particularly hard. Too many victims lost faith not only in the fairness of our economy but also in the political system they believed had let them down. I believe that the anger that generated was a major cause of the partisan political gridlock we have seen around the country but especially in Washington.

If people who were venting that anger now begin to believe their financial situation is improving, I think we will begin to see increasing moderation in our political discourse at all levels. I think there is a chance we will return to the kind of bipartisan problem solving that allowed us to do great things as a nation. We face some very serious challenges – including reducing the national debt, reinvigorating stagnant middle-class wages, shrinking the widening gap between rich and poor, rebuilding and improving our crumbling infrastructure – but when Americans return to the kind of optimism that characterized us for most of our history, there are few limits to what we can achieve.

The Gallup poll is a solid sign that we are on our way to better times.

Ted Kaufman is a former U.S. Senator from Delaware.

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