Listen to most economic commentators and you'd think the biggest news of 2005 was that the American economy continued to grow at a healthy clip -- notwithstanding hurricanes, oil shocks, trade imbalances, and a bloated federal budget deficit. Well, that's true. The power and resilience of this economy are remarkable.
But there's another story about the American economy that's equally remarkable although more sobering. Although the data aren't all in, it seems almost certain that in 2005 median incomes continued to drop.
It's been that way for four years now, since the end of the last recession. The economy keeps growing but median incomes keep declining. Take inflation into account and you find that half of all American workers are earning less now than they did in 2001. Rarely before in history has there been such a long period of growth in the gross domestic product without most Americans sharing in that growth.
Forget "trickle-down" economics. Even if you believe the Bush tax cuts of 2001 and 2003 helped the economy grow -- and if you do you probably believe in Santa Claus -- nothing is trickling down, not even to the middle. Most is going to the top fifth. And most of that is going to the top 5 percent.
So let me end 2005 by asking what may seem an impertinent question: What's the point of economic growth if most people aren't any more prosperous?
Maybe it's time we stopped measuring the success of the American economy by how much larger the GDP is from one year to the next, and started using a new measure that reflects how most of us are doing from one year to the next. Instead of GDP, let's look at what might be called the MDP -- median domestic prosperity.
The American economy is strong when the MDP is rising, weak when it's falling. When it declines for four years in a row, we're in an MDP recession.
Look, I don't want to end the year on a downer. I want to cheer as much as anyone. But let's be honest. Unless you happen to be in the top 20 percent of income, this economy is nothing to cheer about.
Happy new year.
Robert B. Reich is co-founder of The American Prospect. A version of this column originally appeared on Marketplace.
