By CONOR DOUGHERTY
Barack Obama promised change. But the country he will lead is already changing in many ways that would challenge any president.
The U.S. is well on its way to becoming a "majority minority" country, where fewer than half the residents will be whites of European ancestry, raising issues of national identity and cohesion. Good-paying jobs in manufacturing continue to disappear, as they have for decades, but now high-paying ones in the financial sector are likely to vanish too. Among the fastest-growing age groups are Americans between 55 and 64; that increase highlights the growing burden of health care and pensions. Americans are more anxious than they've been in decades about their economic future.
The culture is changing as well. More Americans are likely to find their news and entertainment on the Internet, a shift that's changed media industries that shape opinions and culture. While a higher percentage of Americans are graduating college, a bachelor's degree no longer guarantees rising wages.
Many of the changes are for the good, including the prospect of better race relations, and the easing of regional tensions. Americans are saving more -- a shift that will be painful in the short term but could build a reservoir of capital to create jobs and investment. The recession may narrow the gap between the rich and everyone else.
In some ways Mr. Obama's rise parallels those changes. The child of a black Kenyan father and a white mother from Kansas, Mr. Obama was raised in Hawaii as well as abroad and represents the blurring of racial edges that will be part of the American future. His road to the White House also has reflected the growing alarm about the economy. When he launched his campaign two years ago, he spoke about elevating the middle class; when he spoke to crowds at the Lincoln Memorial on Sunday he warned of an economy in "crisis."
Demographic changes -- not only racial ones -- will continue to shape politics and the economy. America is getting older too. The retirement of the Baby Boomer generation, the oldest of whom is now 63, will pose an especially big challenge for a president who plans to spend heavily to counter recession. Even before the slump that began last year, Social Security was projected to go broke in three decades and Medicare much sooner, unless the government made big and controversial changes in both programs.
The U.S., long one of the most mobile of nations, continues to see a stream of Americans move south and west, although the lack of jobs and difficulty in selling homes have slowed that pace.
One surprising change: the renewed vitality of many cities after decades of decay. But for many of them, problems are simply being redistributed. Some cities are growing whiter and wealthier, while many suburbs are becoming less white and poorer. The urban fringe, meantime, has attracted many blue-collar workers and working poor who moved to new housing developments but now find themselves stuck in half-built neighborhoods and homes that are worth less than what they owe.
On the economic front, many Americans have seen their standards of living erode even before the latest recession began. Median incomes, adjusted for inflation, essentially stayed flat between 1999 and 2007, despite an economy that generally grew during that time and brought vast riches to top -- and even average -- performers on Wall Street. Meanwhile unions representing everything from paper-mill employees to auto workers and truck drivers have negotiated contracts with smaller pensions, more-expensive health care and in some cases cuts to hourly pay.
Adjusted for inflation, income of the top 1% of earners grew at an annual rate of 11% from 2002 to 2006, according to an analysis of Internal Revenue Service data by economists Thomas Piketty of the Paris School of Economics and Emmanuel Saez of the University of California at Berkeley. Incomes of the bottom 99% grew at less than 1% annually. With the exception of those with professional degrees, such as doctors and lawyers, every educational group including high-school graduates and PhDs earned less in 2007 than they did in 2000, adjusted for inflation.
Now, the pace of economic decline is accelerating. The country lost almost two million jobs in the last four months of 2008, and economists predict two million more will be lost in 2009. The unemployment rate is expected to rise to around 9% by year end, from 7.2% today. Companies are more likely than at any time since the Great Depression to cut wages.
Americans' frugal repose has been to resume putting away cash -- after the personal saving rate dropped in recent years to near zero as stocks and home values soared. That means fewer dollars spent in the shopping malls. Mr. Obama's program borrows liberally from the 1930s idea that vast government spending can boost economic growth and revive consumer and business confidence.
Americans have a great deal of faith in Mr. Obama's ability to succeed as president. In the latest Wall Street Journal/NBC News poll, two-thirds of Americans disapproved of the job George W. Bush was doing as president. Seven in 10 of those polled thought Mr. Obama was handling the transition to the presidency well.
Write to Conor Dougherty at conor.dougherty@wsj.com
Printed in The Wall Street Journal, page R4
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