Two scholars on a power more transformative than markets or government: people.
There is little disagreement that consumer spending is a critical driver of American economic growth. The recession that began in 2007, while precipitated by the meltdown in the financial sector, is at root a crisis of aggregate demand. The halting recovery has been punctuated by disappointing monthly job reports and—just as important—by gloomy predictions from the Conference Board’s monthly survey of consumer confidence. Even business surveys admit (here and here) that anemic consumer demand (not “job-killing regulations”) is holding back new job creation and economic recovery.
Yet, despite worries about sagging consumer confidence and shrinking paychecks, business leaders seem unconcerned about the declining standard of living of middle-class America, or about the growing number of American families slipping into poverty. Over the last generation, wages for middle-class workers haven’t budged, while compensation for corporate executives and owners is reaching stratospheric levels.