The 0.25 percent increase in interest rates that the Federal Reserve announced yesterday marks the end of an era. It is the first increase in nine years and the first move of any kind in about six years, since attempts to kick-start the economy brought the rate down to just above zero in 2009.
In theory, the increase says the economic devastation that began with the implosion of the housing and stock markets in 2008 is over. Stocks have recovered losses. The housing market has stabilized. Unemployment sits around 5 percent, well within the normal range. Inflation and fuel prices are low.
So why don’t we feel better, more financially secure, more hopeful about our future? Something fundamental has changed.
Some of the decrease in the unemployment rate comes from so many people retiring, dropping out of the job market, agreeing to work the same job for less or working in a lower-skilled position.
Many of the new jobs that sent the unemployment rate down from its 8 percent spike are in low-paying service positions. Overall, studies show median income nationally and locally has been stagnant for 10 years. In New York City, for insance, residents continue an uphill battle against the increasing cost of living — including rents expected to hit a median of $3,055 next year.
Even as we recover, we know that we might never get back the years of growth we had counted on, in retirement accounts and wages and home values. Many young people incurred tremendous college debt to enter a job market less promising than they’d expected.
And much of the overall financial recovery and benefits of low interest rates went disproportionately to the wealthy, who owned the recovering stocks and skyrocketing bonds.
The fear we feel is not that we haven’t recovered. It’s that we have, and this is as good as it gets. Hopefully, now that we’ve regained our equilibrium, we can reclaim our dreams.