Why America's good fortune won't last

The 2015 Census data on income and poverty is out — and for the first time since the Great Recession, it's unambiguously great news.

Median household income was up 5.2 percent compared to 2014 — the largest one-year gain since 1967 at least. Income gains were strong up and down the income ladder, with the biggest percentage gains coming from the bottom income brackets. Poverty fell by 1.3 percentage points.

For eight years, I have been railing against an inadequate economic recovery, pointing out the overlooked downsides and exaggerations of liberal boosterism of Obama's record. But for the first time in my professional career, there is really nothing not to like about this report.

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However, there are still some important qualifications to note — most importantly, whether or not such good numbers can be sustained. The previous two economic expansions featured similarly good news right before a financial crisis struck — destroying all the preceding income gains and then some.

First, we should note that a big chunk of the good news is due to fortuitously low inflation. If the Federal Reserve were meeting its 2 percent inflation target, income gains would have been much lower at "about 3 percent," said Economic Policy Institute economist Larry Mishel on a media conference call Tuesday. Even that is nothing to sneeze at, but it's not nearly as spectacular. That's probably not something we can count on in the future. While inflation has been trending down for a long time, it was near zero for most of 2015 because of a collapse in the price of oil, something that surely won't last forever.

Second, this huge gain in median income is actually the first statistically significant increase since the recession struck — and despite its size, did not recover the lost ground since 2007. Median household income is still down 4.6 percent from 2007, and 5.2 percent from the all-time 2000 peak. If 2016 is another year of strong income growth — and initial data is promising — in 2017 we just might be able to say that median household incomes have been flat for the last 16 years.

And after that, it will take many years of consecutive similar reports to reverse the systemic economic problems that have taken root over the last four decades — in particular, the grotesque level of inequality.

Needless to say, nothing like that has yet happened this century.

Finally, there is the matter of the next recession. Since the Volcker years, these have typically been caused by financial crises. As yet, there is no obvious indicator of bubble behavior. Stock prices are up compared to 2009, but have plateaued over the last year or so — no skyrocketing as in the late '90s. Home prices are up from the 2012 nadir, but not by that much (outside of a few odd markets like San Francisco).

Still, bubbles can develop quickly, and in unexpected places. Not many spotted the housing bubble at the time. A disaster in China or Europe could easily be transmitted to U.S. shores through a globalized, rickety financial system. Or, the Federal Reserve could easily cause a recession by excessively aggressive monetary tightening, something to which they have been disturbingly prone.

But fundamentally, the current economic expansion has already lasted seven years, well above the postwar average. The longest expansion in history, from 1991 to 2000, lasted 10 years. We'll reach that mark by 2019. A recession is coming at some point, by one route or another.

Again, this report is great news. Finally, the whole income spectrum is getting a piece of economic growth. But there is little reason to think the good news will persist long enough to seriously dent the economic problems afflicting American society — and every reason to think the next recession will be akin to the ones before it. When the economy shrinks again, the middle and bottom of the income ladder will probably lose most of the ground they have made up over the last several years — if not more.

So by all means, celebrate this report. But let's not kid ourselves: The American economy still needs serious work.