Five things to be optimistic about in America today

Enough doom and gloom, let's allow ourselves a moment of happiness.

Photo by 🐣 Luca Iaconelli 🦊 on Unsplash

Recently I’ve been writing some fairly gloomy stuff, mostly related to war and international affairs. But even though I’ve been focusing on scary happenings overseas, I’m still very optimistic about the domestic situation here in the United States. So I thought I’d make a little list of trends that we should be happy about.

First, the big picture. 2020 and 2021 were pretty dark years for the U.S. in many ways — not in all ways, but in many. Covid killed a million Americans, there was massive social unrest, violent crime skyrocketed across the nation, and in 2021 inflation soared and real income fell. There were some good things going on too — Covid relief spending allowed a lot of people to pay down their debts, and the economy rebounded strongly in 2021 — but overall, if you said that 2020-21 were bad years, reasonable people probably wouldn’t contradict you. I still expressed optimism during those years, but more of the “We can fix it” variety rather than the “Things are going great” variety.

Those years, and the years of unrest that preceded them in the late 2010s, cemented a negative mood in the minds of the American people that will take a while to heal. But the healing is underway, because there are a bunch of positive trends going on in the nation right now. Here are a few.

Crime is going down now

Violent crime is a huge problem in America today — in fact, it’s pretty much always a huge problem in America, since this is generally a very violent country. But in the 1990s, 2000s, and early 2010s things were getting steadily less bad.

(Just as a side note, I like to use murder rates as a proxy for overall violent crime — assault, robbery, and rape are subject to underreporting. If there’s a lot of assaults happening, people might just stop calling the cops when they get punched, but everyone calls the cops for a dead body. So I use murder to measure overall violent crime. Also, I often just say “crime” when I mean “violent crime”, because many other people use this shorthand.)

Violent crime hit a low point in 2014. But in 2015, it started drifting up again, and in 2020 it absolutely spiked. Many, including myself, feared that America was entering a long-term period of elevated urban violence, like we did in the 1970s.

But starting in 2022, something good started to happen — violence started to fall. It fell even more in 2023:

Source: Axios

And the trend looks like it’s continuing, or even accelerating, in 2024. The Wall Street Journal has a great table where you can look at changes in murder rates in various cities over the last year. In most cities, murders are falling, and in some places they’re absolutely plunging:

Source: WSJ

America is becoming safer. Why? Unfortunately, as with the big crime decline that started in the early 1990s, we’ll probably never know. Changes in policing and incarceration, the good economy, and falling social unrest are all possibilities.

But the good news here is that the country seems to be getting safer. If the trend continues, we could get back to the relatively good years of the early 2010s.

We’re making progress against climate change

One thing that gets many Americans depressed — especially many young progressive Americans — is climate change. And that’s understandable! Climate change is a huge threat to our way of life, not to mention the natural world. The last year was especially brutal.

There’s an inherent difficulty in solving climate change, since it’s an externality — climate policy is made at the level of individual countries, so each country has an incentive to sit back and do nothing and insist that the other countries handle the global problem.

But there’s another powerful force working against climate change: technology. Solar power, batteries, and other green technologies have gotten cheaper at astounding rates, to the point where decarbonization is the smart economic option as well as the good environmental choice. At the same time, economic growth is generally shifting from manufacturing to services, especially online services, which are less carbon-intensive.

As a result, emissions have been falling in the developed world, and decelerating across much of the developing world:

Source: Nat Bullard

And as a result, projections for how bad climate change will get have been falling for the last six or seven years:

Source: Cipher

Obviously much more needs to be done. 2.7 degrees of warming will be pretty catastrophic for a lot of people and places, and even 2.1 degrees will be difficult to live with. Electrification and decarbonization need to accelerate.

But still, this is big progress, on a huge, important, and potentially even existential issue.

The U.S. economy is growing pretty fast

A lot of people these days like to downplay the importance of GDP, but actually it’s a very important economic number. GDP is a measure of national income — the amount that people spend on goods and services is, theoretically speaking, the same as the amount that people earn (even if in practice there are small differences between these numbers when we measure them). We want people’s incomes to go up! That means GDP growth. Also, faster GDP growth means more people have jobs.

U.S. growth has actually been pretty average since the pandemic; it’s basically staying on the trend line of previous decades.

But when you look at international comparisons, America is actually doing really well. Most countries have struggled to grow at pre-pandemic rates in the post-pandemic era — this is especially true of European countries that suffered from the Russian gas cutoff, but it’s also true of places like Japan and Canada (and even China). The U.S. has powered ahead, even when you take higher immigration rates into account:

(Note: This is not a per capita measure, but since most population growth in rich countries is now due to immigration, it’s basically the same.)

And forecasters expect the U.S. to continue to outpace other rich countries this year as well.

Why is the U.S. growing so quickly? Two commonly cited reasons are 1) the U.S.’ expansionary fiscal policy, including more generous Covid relief payments, and 2) Biden’s industrial policy, which is causing a boom in factory construction.

But I would also like to point out allocative efficiency. The U.S. economy got very shaken up by Covid; a lot of businesses were destroyed, and there was a huge boom in new businesses. Americans also moved around the country a lot more than they had been doing in previous years. That churn results in a better allocation of productive resources — crappy old businesses die and better ones replace them, while workers move to jobs and places where their talents are put to better use.

In any case, American income is growing strongly. And there’s even better news: The higher income is flowing into the pockets of young Americans and the working class.

Younger generations are doing better than their parents

I’ve written several posts about this over the past year, but the positive data keeps coming in, and it’s good to go over it again.

In the 2010s, there was a big worry that the Millennial generation, and perhaps also Generation Z, would be uniquely hurt by the financial crisis and by other negative economic trends. But in the years since the pandemic, it’s become apparent that younger generations are — on average — doing very well economically. The Economist has a good story showing generational income gains by age:

Source: The Economist

Note that this chart is adjusted for changes in the cost of living over time.

And Jeremy Horpedahl has been tracking younger generations’ wealth gains over at his blog:

Source: Jeremy Horpedahl

There are two basic reasons for the jump in the wealth of younger generations: 1) rising house prices, and 2) falling debt levels.

Now, these are averages, not medians. It’s reasonable to worry about inequality within the younger generation, especially regarding who gets to inherit an expensive house from their parents. But from 2019 to 2022, there were big increases in Millennials’ median wealth, not just average:

Source: FRB

The changes were especially good for traditionally disadvantaged groups — Black and Hispanic Americans, Americans without a college degree, rural Americans, renters, etc. So that suggests that the surge in the wealth of the younger generation isn’t flowing disproportionately to richer young people (as it might be in the UK).

So young Americans are doing well — they’re making more than their parents did at similar ages, and their wealth is higher too, despite spending more years in school and getting a later start on their careers.

Wage inequality is falling

Inequality in America increased a lot in the 1980s, then again in the 2000s and early 2010s. By far the biggest piece of this was increased wage inequality — some people earned a lot more, others saw their wages fall. There were huge debates over what caused this — the decline of unions, competition with China, automation, changes in the tax code, or the rise of new technologies that benefitted educated workers more than others.

But in the mid 2010s, wage inequality plateaued:

Source: realtimeinequality.org

And since the pandemic, this trend has accelerated. Autor, Dube, and McGrew have a recent paper titled “The Unexpected Compression: Competition at Work in the Low Wage Labor Market”, in which they document how low-wage and medium-wage workers have seen big gains since 2019, while high-wage workers have lost a bit of ground. They cite the reallocation of labor as the biggest factor — now that Americans are switching jobs a lot more, low-wage workers are able to drive a harder bargain against their employers.

In fact, Jeremy Horpedahl has my favorite chart showing the real wage gains (i.e., adjusted for the cost of living) across the distribution:

Source: Jeremy Horpedahl

It would be nice if the top fifth had gained as well, but the strong gains for the people at the bottom are something to celebrate.

So those are five recent trends to be optimistic about in America today. We have a healthy economy, which is finally delivering on its promise to low-wage workers and young people, both in terms of greater income and greater wealth. Crime is falling, and the threat of global warming is a little less dire. If that doesn’t make you smile on a Thursday afternoon…well, I did my best.

---