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The Best and Worst of 2007: The Economy
By Bernard Wasow
This past year may be remembered as an economic turning point for the
The Best
The best economic news of 2007 was the bad things that had not happened:
- Economic growth continued, though it will not reach 2 percent for the year. The unemployment rate for the year will come in below 5 percent, low by historical standards. The economy produced these respectable numbers even after the housing bubble burst.
- Household incomes continued to grow at the top of the income distribution and stagnate for the rest, the pattern of the past thirty-five years. The continuing growth of income inequality has produced rapid growth of federal tax revenues, delivering indirect evidence of progressivity in effective taxes, which is good news.
- In spite of a huge (though reduced) continuing
- Outside the
- In much of Sub-Saharan Africa, economic growth continued to outpace population growth, which continues to decline.
- As in 2006, the threat of self-destructive anti-immigrant policy continued to find a large audience in the
The Worst
The bad news for 2007 carries gloomy implications for 2008:
- As the financial industry chokes on the consequences of terrible mortgage underwriting, the threat of a liquidity crisis grows, putting at risk not only millions of ill-advised home buyers, but also financial institutions worldwide that acquired "contaminated" securities.
- The real consequences of the housing bubble - no more real estate projects entering the construction pipeline - together with the financial consequences, have made a recession in 2008 increasingly likely.
- Faced with the need to raise revenue, especially to reform the Alternative Minimum Tax, the Senate shied away from responsible Pay As You Go tax reform and jury-rigged a "fix."
- Domestic infrastructure and social needs continued to go unmet while
- Wealth-holders the world around - notably our creditors in
- The HIV-Aids crisis remained catastrophic in much of Africa and a growing threat in
- While the threat of global warming is causing real popular concern, public policy has shown more bark than bite. In the
- In the
At the end of 2008, the news probably will be considerably gloomier. The "American Century" may be nearing its end.
The Century Foundation conducts public policy research and analyses of economic, social, and foreign policy issues, including inequality, retirement security, election reform, media studies, homeland security, and international affairs. The foundation produces books, reports, and other publications, convenes task forces, and working groups and operates eight informational Web sites. With offices in