The best days of the American economy are long in the past, and better days for the United States (US) are unlikely in the foreseeable future.
The 20th-century idea of an “American Dream”—where a sizable majority of people in the US could become or aspire to become middle class, affluent or even extremely wealthy—is mostly dead in the second quarter of the 21st. According to a report from Moody’s Analytics in February, the richest 10 percent of Americans (households with an annual income of at least $250,000) drove half of all US consumer spending (about $10 trillion) between September 2023 and September 2024.
The fact that 12.7 million households could collectively outspend much of the rest of the nation is truly jaw dropping. It points to the end of an economy that has depended primarily on the needs-based and discretionary spending of ordinary working Americans since the end of World War II.
The best days of the American economy are long in the past, and better days for the United States (US) are unlikely in the foreseeable future. The 20th-century idea of an “American Dream”—where a sizable majority of people in the US could become or aspire to become middle class, affluent or even extremely wealthy—is mostly dead in the second quarter of the 21st.
According to a report from Moody’s Analytics in February, the richest 10 percent of Americans (households with an annual income of at least $250,000) drove half of all US consumer spending (about $10 trillion) between September 2023 and September 2024.
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The fact that 12.7 million households could collectively outspend much of the rest of the nation is truly jaw dropping. It points to the end of an economy that has depended primarily on the needs-based and discretionary spending of ordinary working Americans since the end is exactly what the wealthiest of Americans have wanted for decades.
By the measure of most experts, the economic power of ordinary Americans peaked sometime between 1970 and 1974. More than six out of 10 Americans could claim middle-class status, and Black, Latinx, and other Americans of colour had begun to climb into the US middle class in larger numbers
The story goes that the OPEC oil crisis, brought on by the US supporting Israel during the Yom Kippur War of 1973, along with the deindustrialisation of the American Midwest, ground down the US economy from 1973-74 onward. The combination of higher unemployment and higher inflation, known as stagflation, ended a three decade run of endless US economic dominance and prosperity. But this story makes it seem as if a set of unfortunate circumstances ended the Pax Americana.
In truth, the major corporations, the wealthiest of Americans and the federal government began shifting resources away from ending poverty and sustaining the American working and middle classes during the 1970s. The War on Poverty/Great Society programmes President Lyndon B Johnson pushed through in 1965 were the final straw for the burgeoning neo conservative movement.
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As the late neoconservative movement co-founder Irving Kristol wrote in his autobiographical memoir about the “curse” of the War on Poverty, they “knew that becoming politically militant was no way for poor people to lift themselves out of poverty”.
Kristol and his followers believed that the sociological motivations for idealistic affluent policymakers was that a “‘Great Society’ could only come about as a consequence of class struggle,” all but accusing Johnson’s policy wonks of being affluent communist stooges for the Soviet Union.
Neoconservatives saw Johnson’s vision of ending poverty and shifting more public tax dollars to truly lift all Americans into prosperity as communist and dangerous. By the time of President Ronald Reagan’s conservative revolution in the 1980s, both the remnants of the Great Society and War on Poverty programmes and even the social welfare system Franklin D Roosevelt built through the New Deal in the 1930s faced attacks and austerity.
Although Reagan claimed in his diary in 1982 that “the press is dying to paint me as now trying to undo the New Deal. I remind them I voted for F.D.R. 4 times. I’m trying to undo the ‘Great Society’,” he ultimately showed disdain for all social welfare and social mobility policies.
For years, Reagan alleged that “fascism was really the basis for the New Deal,” that the New Deal’s policy planners working under Roosevelt “spoke admiringly of how Mussolini had made the trains run on time”.—Al Jazeera
