Even in the 1990s, at the peak of free-trade fever in Washington, Congress knew that globalization would be rough on some folks. Opening the economy up to cheap imports from Canada, Mexico, and China was bound to undercut domestic industries and cost many American workers their jobs. On top of that, welfare reform eliminated or sharply cut benefits for many families.
Perhaps no puzzle has consumed the American media more in the past few months than the chasm between official measures of the economy and how average people feel about it. Inflation is down, and wages are up—yet voters remain gloomy. Young people are, at least by some measures, the most pessimistic. They think the economy is bad and getting worse. Why? The answer has major implications, not least on the outcome of the next presidential election.