Living Large In D. C.
"I'm heading down to Washington," said the sad-faced New York economist. "You know: the financial capital of the world."
You want a taxi on 59th Street at five in the afternoon? A year ago -- impossible. Today, you raise your head, and you'll have half a dozen bearing down upon you. The shop windows on Fifth Avenue advertise "almost free sales." The restaurants are ghostly.
"My neighbour just disappeared," an executive says over dinner. He tells this story: The executive lived in an expensive commuter town in New Jersey. His lot touched another lot owned by the general counsel for a major financial firm. One day the house was suddenly empty. A "for sale" sign went up. Moving vans emptied the place. Six months later, the house is still empty, still for sale. Somebody mows the grass once a week -- otherwise there is no sign of the former owners.
"Think you can't afford our watches? THINK AGAIN" reads the sign in the window of an elegant store in midtown. Condominium prices are down by 55% and more since early 2008, reports the New York Times.
Down the Amtrak line in Washington, times are not exactly flush -- but it's hardly the Great Depression either. The restaurants here are full, especially the expense-account steak palaces. When you're giving away $800-billion in stimulus funds, rapidly followed by a $3.55-trillion budget with $750-billion in troubled assets funds likely to come after (that's on top of the $700-billion already committed) ... well in that case, there'll be a long line of people eager to buy you a slab of beef.
The southbound trains are full of well-groomed men wearing expensive watches. "Sorry to have snubbed you at the class reunion, Fred. When you said you had just been appointed an assistant secretary of the Treasury, I didn't realize you meant assistant secretary of the Treasury. That must be fascinating work! Little more A-1 sauce on that steak?"
A friend comes by for coffee on a Sunday morning. Six years ago, in his middle 20s, he enlisted in the Marine Corps. Now he's a captain, working as a military lawyer. He jokes: "I'm the only guy in my law school class who got a pay raise this year!"
Back during the boom years, people who worked in government used to joke about the comparatively low pay. "They pay us every two weeks, whether we need it or not." Now a government salary suddenly has all the appeal of a stack of cash money. Is it a coincidence that the proposed Obama income-tax increases will take effect just slightly above the highest government pay grade of $177,000?
Not that we're entirely immune here in government town. Another friend tells this story. He's in line in Nordstrom's, the big American department store, waiting to pay for some on-sale pyjamas. Ahead of him is a man with a stack of shirts, all 25% off. The cashier rings up the sale. The man with the shirts squints at the bill, then asks: "Is that the best you can do?" My friend with the pyjamas tells the story and jokes, "What is this, the Souk?" But the next time I'm in a store, I say: "Is that the best you can do?" -- and they knock an extra 10% off the price.
The unemployment news arrived Friday afternoon. Six hundred and fifty-one thousand jobs lost in February, the U. S. unemployment rate at 8.1%, worst since 1983. The new Pew poll reports a sudden and dramatic loss of optimism among upper-income Americans. In October , 59% of Americans earning more than $100,000 expected their personal financial situations to improve over the next 12 months. In February, only 44% did so.
Poorer Americans have become slightly more optimistic: Sixty-five percent expect to see improvement, up from 61% in October. They may be right too. The Obama economic plans propose to raise the proportion of Americans who pay no income tax from the current 38% all the way to 50% -- a permanent voting majority in favour of more government spending.
If nothing else, that should be good for business at Washington steak houses.
Originally published in the National Post.