...Instead of sharp swings in economic activity that characterized the U.S. before the 1980s, we now have economic boomlets and bustlets happening all the time, in different industries and different regions.That's been swell news for central bankers. For the rest of us, it's been a mixed blessing. "If you look at the economy today, it's meta-stable. Lots of people can fail, and the system can remain quite strong," says Eamonn Kelly, the CEO of Global Business Network, the consulting and forecasting firm that evolved out of Royal Dutch/Shell's famed scenario-planning operation. "You're not dependent on single lines of connection anymore. Anything that goes wrong in the system, you can route around it pretty quickly." Partly as a result, the U.S. hasn't had a year of negative GDP growth since 1991 (vs. four of them from 1974
to 1982). Pity those, however, who get routed around: "It's not like it's meta-stable for every actor," says Kelly. "For individuals it's less secure than it used to be."That is the perversity at work when we speak in Fed-speak: some of the very changes that have made the Fed's job easier over the past quarter-century have made our lives harder. Jobs are less secure, and benefits like health care and pensions are less certain, than in the decades following World War II. That makes it far harder for workers to force pay raises and far easier for a central bank to keep inflation in check. . . . [A]fter adjusting for inflation, wages and salaries have actually been declining for the past two years. . . . [and] the average
hourly, adjusted for inflation, is lower now than it was in 1973.
Maybe that's why consumer confidence is so fragile these days - slipping even deeper every time gas prices rise or a major corporation melts down. The most recent report has only 38% of Americans holding a positive view of the buying climate despite Bush's crowing.