That’s the understatement of the decade. As the U.S. economy enters its 107th month of expansion this week, unemployment is at a 30-year low; consumer confidence is at a 50-year high. Since this boom began, in March 1991, the economy has created 20 million new jobs and America’s output of goods and services has grown by an astonishing 58 percent. By one estimate, the number of millionaires has doubled, to 9 million. Half of all households now own stock. Statistics are handy, but they don’t capture the psychological magnitude of this change. Says Laura D’Andrea Tyson, the University of California, Berkeley, economist and former White House adviser: “This generation has never witnessed failure… They’ve never known anyone who’s lived through taking a risk and having it not work out.”
That fundamental shift in outlook is fueling a national spending spree that has rippled through the entire economy. Confident workers are racking up record purchases of big-ticket items like cars and homes. And prosperous citizens are also dining out more than ever, buying fancy jewelry and spending heavily on gadgets from cell phones to PalmPilots. The economy’s ever-upward surge has transformed a generation just as the Great Depression did, profoundly shaping views about wealth, job security and risk. Frank Fertschneider, 73, of San Luis Obispo, Calif., never forgot his dad’s four painful years of unemployment during the 1930s. So Frank spent 35 years working for the same school district, drove cheap cars and invested in supersafe mutual funds. His son Erich, 38, a manager at a Toyota dealership, has a different world view. “I’m more buy now, pay later,” says Erich, who switched jobs 18 months ago. Erich aggressively invests most of his 401(k) in Pacific Rim and other foreign stocks, and expects the good times to keep paying dividends.
The long boom hasn’t changed every life. Roughly one of every eight Americans still lives below the poverty line. As always, capitalism rewards some skills and not others, giving rise to deep-seated inequalities. But the current boom has had widespread benefits. Even people who missed the bull market are likelier than ever to have a good-paying job–and thanks to the tight labor market, the chance of getting a better one. But from coast to coast, the boom is playing itself out in the lives of millions–changing institutions and creating vast new opportunities.
Check out what’s become of the old unemployment office in the Austin, Texas, exurb of Round Rock. The new “career center” there feels more like a bustling headhunter’s office than a lifeless bureaucracy. Gone are the lines filled with sad-eyed folks waiting to file for unemployment checks; today that’s handled by telephone. “Customers,” as job hunters are now called, search Internet sites and fax job applications from a warmly furnished office. So many corporate recruiters now show up, eager to hire, that the center is expanding to create more interview rooms. “Some customers spend so much time here that they think of this as their office, which is great,” says Kathy Barrett, who coordinates services at the center. Barrett’s own paycheck comes from Lockheed Martin, which runs 28 of the state’s newly privatized job centers. Patrons like the new, upbeat culture. When Donna-Lauri Ramirez last visited in the late 1980s, “you filled out papers, sat on a metal chair and waited for someone to call your name,” she says. Laid off by a hotel, she was back last week, surfing Web sites and weighing her options.
These days, job seekers are as likely to be driven by ambition as by unemployment. Paul Fletcher, who supervises 10 of Lockheed Martin’s offices, estimates that nearly half of his clients already have jobs but are looking for something better. Another measure of the new confidence is the number of workers who feel the freedom to change careers. Down a row of computers from Ramirez sits Mike Mefford, 57, who recently resigned as vice president of a printing company. Now he’d like to try something in the human-resources field. In this tight job market, he’s likely to find it.
With easy-to-find jobs as a safety net, millions of workers are creating their own opportunities by morphing into entrepreneurs. For 21 years Mike McCrea of Denver has driven a hazardous-waste truck; he earns $60,000 a year. But his real passion is cooking. So last year he spent $10,000 to launch an afterhours business: Big Mike’s BBQ Sauce. He chops, blends and simmers ingredients at the Denver Enterprise Center, a “business incubator” set in the middle of a housing project. There, budding entrepreneurs use an FDA-approved kitchen to bake, bottle or bag their goodies. Big Mike may soon go it alone; he’s scouting bigger facilities where he can cook 500 gallons of sauce at a time. Soon he’ll get the twin pedigrees of a small business–his own UPC bar code (which supermarkets require) and a Web site. He lost $7,500 last year, but in 2000 he predicts $15,000 in sales and $5,000 in profits. One sign he’s poised for success: he already speaks of himself in the Trumpian third person: “Big Mike will be to BBQ what Bill Gates is to software!”
It’s the stock market, as much as the economy, that’s made Gates and countless others rich. The bull market has created what’s called a “wealth effect”: paper profits make investors feel richer. Institutions, too, have benefited. At Williams College, a top liberal-arts school in western Massachusetts, hot stocks have ballooned the school’s endowment to $1.2 billion. That’s because in 1994, finance-committee chairman Allan Fulkerson and his colleagues rejiggered the port-folio, tripling holdings in “alternative investments” like venture-capital funds to 25 percent. Driven in part by dot-com IPOs, the school’s investments are up 22 percent annually in the last four years. Those numbers put provost Catharine Hill in a pleasurable bind: what to do with the sudden largesse? Specifically, did Williams really need to raise tuition by the traditional 3 or 4 percent next fall? After some debate, administrators decided to freeze Williams’s price tag at last fall’s $31,520–the first time an elite private school hasn’t raised tuition in decades. “Williams decided to bite the bullet and break the cost spiral,” says economics professor Gordon Winston, who first suggested the move.
The boom has also boosted tax revenues, and not just for the Feds. Cities, too, have seen their coffers bulge, so it’s time to build. In Chicago, Mayor Richard M. Daley’s administration has planted 240,000 new trees and rerouted Lake Shore Drive to create a terraced campus of museums. The city now boasts a revitalized theater district and a thriving Navy Pier entertainment complex. Consider the new Roosevelt Road bridge, southeast of the Loop, as a metaphor for the times. No question, the city needed a bridge. But by spending 10 percent extra on decorative frills, Chicago now has a gorgeous span, complete with art-deco globes lighting its traffic lanes. In the ’70s and ’80s, some cities teetered near bankruptcy. But during this long boom Chicago has spent a stunning $5.3 billion on capital improvements, much of it aimed at beautification. Other cities have followed suit. Miami of Ohio political scientist Michael Pagano estimates that in the nation’s 50 biggest cities, capital expenditures have been rising 9 per-cent every year–nearly five times faster than operating expenses. In Chicago that spending has a simple goal, says Planning Commissioner Christopher Hill: “To make the city a place where people want to live.”
Amid this bounty, a few Jeremiahs–most of them older and wiser–are starting to worry. They recite a new twist on FDR’s famous line: in the new economy, the only thing we have to fear is the lack of fear itself. California financial planner Judi Martindale sees this naivete every day. “Younger people have never seen the economy go down,” says Martindale, 52, who puts the generational breakpoint at around 40. This can lead to a startling excess of optimism, like the twentysomething who rankled at Martindale’s advice to consider some low-risk investments. “Why would anyone ever invest in anything but aggressive growth stocks?” he asked, mystified.
In the most successful pockets of prosperity, the boom is forcing some people to ask some new questions. Some newly rich execs find that when they’ve captured the elusive brass ring, it’s not as fulfilling as they’d thought. “I get clients who’ve spent their whole life chasing money,” says Jessie O’Neill, a “financial therapist” based in Wisconsin who helps the newly moneyed come to terms with the condition she calls “affluenza.” “They’re saying, ‘Now I’ve got it, but I’m not happy. What happened?’ They’re disillusioned, depressed.”
But this week, when the boom hits new lengths, it’s time to put that anxiety aside and celebrate, albeit in a subdued fashion. Remember, econ is the dismal science. Economists won’t spring for the confetti or party hats that traders used last spring to mark the Dow’s climb past 10,000. Besides, 107 months is such an awkward number. Why not wait for something rounder? “It’d be nice if we have a big hoopla when we hit 15 years,” bubbles Wayne Angell, the former Fed governor, who believes that barring a misstep by Alan Greenspan, the expansion could run recession-free for years. That would mean more lazy days for Stanford economist Robert E. Hall. He heads the Business Cycle Dating Committee, which officially calculates when recessions begin and end. It’s composed of six or seven economists–he can’t exactly remember how many, since they’ve had nothing to talk about for nine years. And, thankfully, he sees no reason to meet any time soon.
