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Weekly Standard Online

Split-Personality America

Americans are convinced that things are not going well, and are not likely to improve soon. Gerald Seib, who follows these things for the Wall Street Journal, says Republican pollsters report the national mood as “Sour and dour. Nervous, on edge, a feeling of vulnerability and a lack of control." Democratic pollsters use different words to capture the same mood, "Anxious, dissatisfied, impatient and basically any other word that connotes uncertainty." My own experience in the run-up to and during the New Year weekend verifies those findings. At almost every event people who typically pay more attention to college football scores than to international affairs seem unnerved when China tells us where we might fly in Asia, the Russians do the same in the Middle East, Vladimir Putin grabs Crimea despite warnings from Obama that he is "on the wrong side of history", Iran sends missiles whizzing by our aircraft carrier while we continue to draw up plans to turn $150 billion over the Mullahs, Syria's Bashar Assad crosses the presidential red line, and we grant diplomatic recognition to Cuba while it continues to round up political prisoners and refuses to return a Hellfire missile that somehow found its way to Cuba from its intended destination in Europe. Even Trump-haters feel "we never win anymore", a view that colors their view of seemingly unrelated events.

* A real estate agent worries that the strong dollar will deter foreign buyers from continuing to snap up properties here.

* A working woman nearing retirement who "played by the rules" and saved rather than partying wants to know whether she should cash in her 401(k) [retirement plan] or switch it out of equities.

* A retailer tells me that the 8% drop in his sales in the year just ended is "tolerable", but fears on-line sales are about to make him an economic dinosaur because if mighty Macy's can't survive in the Amazon era neither can he.

* A home builder doing well nevertheless worries that the Fed will be raising interest rates four more times this year for a total of a full percentage point, as Federal Reserve Board vice chairman Stanley Fischer says is likely, making mortgages more expensive, or the market is right that increases will be fewer and less.

* A rather prosperous lawyer, convinced his children and grandchildren, burdened with $18 trillion in government debt and $66 trillion in unbooked obligations (Medicare, Medicaid, Social Security), some 500% of GDP in all according to the reckoning of Janus Capital's Bill Gross, believes his children will not live as well as he has.

* An environmentalist, disappointed at the failure of the Paris climate-change conference to set emission limits sufficiently stringent and enforceable, says that irreparable damage to the planet will bring it to the borderline of livability, and soon.

* A long-time Republican "wise man" despairs at what Trump is doing to the party's prospects in the 2016 congressional and presidential elections, and a well-known conservative pundit prepares to vote for Hillary Clinton.

Enough "dour" and "sour" and anxiety, defined by New York Times columnist David Brooks as an "unfocused corrosive uneasiness", to go around. Throw in a share price tumble that in the first four days of the year wiped $2.6 trillion off the value of the world's stock markets, and it is no surprise that anxiety mounts.

All this before Friday's first jobs report of the year, one that even the dourest and sourest observers have to concede is good news. The economy added 292,000 jobs in December, and the Bureau of Labor Statistics upped its jobs-growth estimates for September and October by 50,000. For the year as a whole, the economy added 2.7 million jobs (revision possible), with the exception of last year (3.1 million) the largest jump since 1999 (3.2 million new jobs). Not enough to offset dour and sour, at least for some. They fear that what seems like good news is really bad news: it will encourage the Fed to continue raising interest rates in an economy that continues to limp along at a 2%-or-lower growth rate, with profits harder to come by, its manufacturing sector hit by the largest fall-off in demand in six years, and suffering gale-force headwinds from China.

Then there is a fact that professional economists tend to ignore. While we pore over the latest data, most Americans look to familiar figures for guidance. Warren Buffett, the man-in-the-street's favorite capitalist racked up investment losses of about 10% last year. George Soros, the man who made something like $1 billion beating the experts in the currency markets and is the darling of liberal organizations into which he pours millions, sees "a serious challenge which reminds me of the crisis we had in 2008." Apple, a company regarded as a symbol of unending innovation and growth, its products on the desks, in the pockets and on the wrists of millions, sees $50 billion wiped off its market value in the first four days of the year. Republican candidates, in debates watched by upwards of 24 million, announce that our economy is broken, and offer plans varying from the undecipherable to the incredible to make it great again. And grim reports on the value of various savings accounts are hitting mailboxes and computer screens, bringing the share-price news "up close and personal".

Still, the sour and dour continued to troop to auto showrooms to buy a record 17.5 million cars and light trucks last year, at average prices that are up on 2014. There has to be some cheer from filling up with $2-per gallon gasoline ($1.76 in Texas), en route to a more secure job from a home worth on average about 35% more than it was at the low point in March 2012. But talk to people, and they say the savings on gasoline and heating oil are more than offset by increases in rents (up about $600 per year in 2015), and rising health care costs, with almost half of all Americans, insured and uninsured, having problems paying their medical bills according to the well-regarded Kaiser Family Foundation. Add up the plusses and minuses, and 70 percent of Americans say the country is on the wrong track.

It might be true, as Nat "King" Cole famously warbled, that "The Party's over, it's time to call it a day, they've burst your pretty balloon, and taken the moon away…". Or it might just be the case, as Goldman Sachs' Investment Strategy Group argues in its latest "Outlook", that "The economy is on a more solid footing than is widely believed". And as retired general and now-investment banker David Petraeus and consultant Paras Bhayani argue in a study funded by Harvard's John F. Kennedy School, that "advances in energy production, manufacturing, life science and IT amount to four interlocking revolutions that could make North America the next great emerging market – as long as policymakers in this country don't impede their potential." Which is exactly what Americans fear they will do.