The Economy And Politics Of 1968: Now Playing In Reruns
In so many ways, 1968 was a great year for middle-class Americans' wallets — and terrible for politics.
On the one hand, gasoline was cheap and unemployment was low. Real estate values were rising, helping average homeowners build wealth. Good times!
Still, many people were not feeling good — at all. In 1968, the tumultuous presidential-election year brought strident clashes at political events, third-party disruptions, calls for "law and order," racial discord and worries about foreign enemies.
In terms of both the economy and politics, we seem to have a summer rerun playing out. Here are some of the parallels on the economic front:
- Gas prices. Baby boomers remember the late 1960s as the good old days for driving because gas cost 34 cents a gallon. Now we're enjoying even better bargains. AAA says the average gallon costs less than $2.14. Adjusted for inflation, that's 31 cents in 1968 terms.
- Job creation. In June 1968, U.S. employers created 251,000 jobs. In June 2016 (the most recent data available), they created 287,000 jobs. In both years, unemployment rates were low by historic standards — at 3.7 percent in July 1968 and 4.9 percent now.
- Home prices. In 1968, the median home price rose 9 percent from the previous year. In 2016, a national index of home prices is up 5 percent from last year, although many cities (such as Portland, Seattle, Denver and Dallas) are up 9 percent or more.
Of course, not everything is the same. These are two big differences:
- Paychecks. In 1968, household incomes were up about 8 percent from 1967. This year, hourly earnings are up 2.6 percent from last year. And the 1968 minimum wage was $1.60, or $11 in today's dollars. But the current minimum is just $7.25. Many states have pushed minimums higher, but none is up to $11 (exception: the District of Columbia at $11.50).
- Consumers' comfort. Today's consumers are having a much better year than their 1968 counterparts. That's because inflation is up only 1 percent from last year, and interest rates remain at historic lows. For example, 30-year fixed mortgage rates are hovering around 3.5 percent. In 1968, inflation was running at about 4 percent and mortgages were at 7.5 percent.
There's another difference: On Friday, the Commerce Department said gross domestic product, the broadest measure of goods and services produced in this country. rose at a seasonally adjusted annual rate of 1.2 percent in the second quarter. In 1968, GDP growth was running at 4.9 percent.
So on the surface, growth appears far less robust than in the late 1960s. But the current sluggishness is related to weak business investment. On the consumer side, personal consumption expanded at a 4.2 percent rate, much more in line with 1968.
And there's plenty of evidence of that at retail outlets. The National Retail Federation predicts back-to-school spending will hit $75.8 billion — up more than 11 percent from last year's $68 billion. "We are optimistic that overall economic growth and consumer spending will continue to improve," NRF President Matthew Shay said in a statement.
So when you examine data over many decades, both 1968 and 2016 look like good years for average Americans. They sure beat the Depression of the 1930s, or the inflation nightmare of the 1970s or the frightful foreclosure years of the Great Recession. No year is perfect, but there's no doubt you'd be happier working in the summer of 1968 or 2016, compared with 1974 or 2009.
So why such intense political discord, both then and now? These parallels may offer clues:
- Voter dissatisfaction. Many young Democrats were furious about the 1968 presidential nomination of Vice President Hubert Humphrey. They wanted the anti-establishment, anti-war candidate Eugene McCarthy, just as many of today's young Democrats wanted Bernie Sanders. Richard Nixon won the GOP nomination with his calls for "law and order." But many voters were so dissatisfied with the two nominees that they supported third-party candidate George Wallace.
- Racial discord. In 1968, race relations were severely strained by the April assassination of Martin Luther King Jr. and subsequent riots. In 2016, race relations have been roiled by charges of police brutality, as well as deadly attacks on police officers.
- Foreign threats. The war in Vietnam was escalating in 1968 amid fears about communism spreading around the world. This year, many voters are worried about the spread of terrorism inspired by ISIS.
Maybe this year's political discontent can best be explained by a theory known as the "revolution of rising expectations." The phrase was popularized in the 1950s to describe global upheavals in the wake of postwar decolonization. The idea was that rising economic expectations can made people restless and more open to insurgencies and revolution than during tough times when people are just trying to survive.
In other words, just as the summer of 1968's political tumult came in the midst of good economic times, this year's intense political debates are playing out in an economic environment that's better for average families than at any time in many years.