When journalists write about the economy, they tend to put in a lot of “buts.” When this week’s economic growth numbers came out (see Best Columns: Business), “the numbers look good, but…” was a popular refrain. Let me add one “but” you may not expect: This week’s numbers look good, but really things may be even better. Not only is growth strong, but real wages are rising quickly. Amazon has raised the minimum wage for its workers to $15 an hour, Target is up to $13, Bank of America has set a $20-an-hour floor. Although these may not sound like impressive numbers in New York City or Silicon Valley, if you’ve ever chatted with folks at a rural church, you’ll know that in much of the country this pay for warehouse workers and customer service reps marks a major improvement. Meanwhile, inflation is low—and researchers who track online prices think real price increases may be even lower than the headline inflation rate.
As you might imagine, though, another “but” is coming: Things are good, but growth is cyclical, and economists are notoriously bad at predicting those cycles. The U.S. saw an almost identical growth rate in early 2015—the very same point in the last presidential election cycle that we are in now. We do not know when the current boomlet will end. We do know that periods of prosperity are the time to solve festering economic problems. That’s what the U.S. did with the War on Poverty in the 1960s. And it’s what the U.S. has a chance to do now with health care and higher education. Each of these accounts for a rising share of the middle class’s resources, and an even greater share of the simmering anxiety of American life. How fast the economy grows is one measure of economic success. But there’s another that is just as important: How well have we used the good years to prepare for the inevitable leaner ones?