US growing but middle classes being squeezed

I have been in the US over the past few weeks and I have been very struck by the nature of media and other discourse here.

It is very clear that the economy is growing, but the pace is not what US policy makers or indeed the American people would aspire to.

The picture is pretty patchy with some parts of the economy and areas of the country doing well, but other parts are still doing very badly. Inequality is very obvious, and there is a lot of angry comment and vitriol being directed towards the banking elites who caused many of the problems and who are now doing very well again.

What strikes me about the nature of discourse is how closely it resembles what is taking place in Ireland. Very different country and very different people, but the problems and sources of conflict are pretty similar.

At the moment I am based in San Francisco and this is a city that is on fire. Residential and commercial property prices and rents are absolutely booming, construction activity is so strong that the city is again hiring workers in the building department, and there is generally a feeling of absolute buoyancy around the place.

Much of this buoyancy is being driven by Silicon Valley. For Ireland this is good news given how important Silicon Valley companies are to this country.

The decision to re-commence direct flights from Dublin to San Francisco next April is being taken very positively by locals. This is a good decision as it makes no sense whatsoever for a country that aspires to be a serious global tech player not to have direct air access to the most important IT centre in the world.

The picture in San Francisco stands out in marked contrast to many other US cities at the moment who are struggling economically and financially — Detroit being a pertinent example.

On the upside, there are clearly positive signs emerging at a national level, signifying that four years after the recession technically ended, some semblance of normality is returning.

For example many cities are now starting to hire public sector workers after five years of sliding numbers. Data released this week show that national average house prices increased by 11.9% in the year to June.

Here in California prices have increased by 21.4% over the past year, but the growth is significantly higher in San Francisco.

One of the other very interesting observations here is the extent to which the so-called middle classes are being squeezed.

Healthcare costs are very high and the cost of education is crippling. To get an acceptable high school education it is necessary to pay for it, as the quality of public education is very patchy. It is not uncommon to pay $10,000 (€7,500) upwards per year for a decent education. The university system is more difficult still. Fees of $30,000 to $50,000 per annum are common.

It is clear that middle income families are struggling badly to cope with these costs and are being forced into crippling debt to survive. This is giving rise to massive resentment towards the banking and corporate elites that are heavily supported by the tax code.

It all sounds very familiar to the squeezed middle class in Ireland. Another point of note is the reaction to the Anglo tapes. They have got widespread coverage here, particularly amongst the Irish. There is a phenomenal level of incredulity that the perpetrators are still walking the streets. Most of us can relate to that feeling.