This evening I was surfing the net and happened to read Paul Krugman’s editorial in the New York Times titled The Angry Rich. In one of the final paragraphs, Krugman says, “You see, the rich are different from you and me: they have more influence. It’s partly a matter of campaign contributions, but it’s also a matter of social pressure, since politicians spend a lot of time hanging out with the wealthy.” This reminded me of a graph I included in a presentation a couple of days ago, shown below.
Our Economic Index represents total wages paid, seasonally and inflation adjusted, indexed to January 2000. In short, it shows the pattern of total real wages paid in a particular area over time. The areas shown in the graph are the entire United States (blue line) and the Washington D.C. metropolitan area (red line). Note that the data covers both government AND private employees in the D.C. area. Of course, many (or most) of the private employees in D.C. directly or indirectly support the government ones. The gray areas are recessions; the blue area is our estimates which bring relatively old government data up to date; and the red area is our forecast for the next year.
What immediately jumps out is that the economy of Washington D.C. is quite different than that of Main Street, U.S.A. Recession? What recession? The folks deciding how economic pain is distributed apparently aren’t feeling that pain at all.
Note that Washington DID feel the 2001 recession as severely as the country as a whole, and more abruptly. Also interesting is that after 9/11, the line does not go up nearly as steeply as I would have expected, at least until 2003. After that Washington stayed in a pretty steep climb, with a few wobbles following the rest of the county, until the finance sector hit the fan in 2007. But even then, and all through the recent recession, Washington stayed level while the rest of the country went into a nose dive.
Being someone who tends to lean a bit to toward being a Democrat (but only a bit), I will smugly note how much the Washington economy grew during the Bush years and how it has been flat during the Obama administration, while conveniently ignoring the rightmost part of the graph…