What should Americans expect from their economy? How should they assess whether it is performing well or badly? Most questions about the health of the economy relate to the short-run ups and downs of the business cycle. If the economy is recovering from recession, people are generally optimistic. They are likely to return incumbent politicians to office. If unemployment is rising, or prices are soaring, people are gloomier and readier for a political change.
Preoccupation with the immediate, however, obscures the longer-term trends that determine how the economy will be performing in the future and whether the next generation will live better than this one. This chapter asks what aspirations Americans should have for their economy over two or three decades. It suggests an answer: if the economy is performing well, it should generate sustainable and widely shared growth in the standard of living. Meeting this test is crucial not only to