Maybe it's not so bad.

Photographer: Andrew Harrer/Bloomberg

Terrible Things That Are Getting Less Terrible

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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Lots of Americans, especially Republican-Americans, are pretty steamed about illegal immigration. Stopping it with a big new wall at the Mexican border is one of the signature campaign promises of GOP front-runner Donald Trump.

As journalists and others have pointed out, though, the number of undocumented immigrants in the U.S. appears to have peaked in 2007. This is from a Bloomberg QuickTake on immigration reform:

To put it in numbers: From 2007 through 2014, net illegal immigration to the U.S. totaled negative 900,000. More undocumented immigrants have been leaving than coming. That wall might actually get in their way.

Immigration isn't the only hot-button campaign issue where the terrible situation that people are so worked up about actually seems to be getting less terrible. Take free trade, which has been subject to much bashing from both Trump and Democrat Bernie Sanders. Meanwhile, the most important measure of trade trouble, the trade deficit, is nowhere near as big as it was a decade ago.

Then there's economic inequality, what Sanders has called "the great moral issue of our time." The share of income going to the top 1 percent, after rising from the late 1970s through 2007, is -- according to the latest estimates by economists Thomas Piketty and Emmanuel Saez -- also lower than it was a decade ago:

These apparent discrepancies between perception and reality are interesting. They don't necessarily invalidate people's concerns, though.

For one thing, even if these three measures have stopped getting bigger, the level may be too high for comfort. Look back a bit further: There were still an estimated 5.6 million more undocumented immigrants in the U.S. in 2014 than in 1995. The trade deficit is as high as it was in the mid-1980s, a time of widespread concern about the consequences of free trade. The share of income going to the top 1 percent in 2014 was 39 percent higher than it was in 1995. Normal people, as opposed to journalists and others who spend their days looking at economic (and other) data, seem to focus on big changes over time more than year-to-year fluctuations. They're not wrong to do so.

At least some of the drop-off in these indicators has been cyclical. There are fewer undocumented immigrants in the U.S. than there were in 2007 in part because there was a terrible recession and then a slow recovery that made it hard for immigrants to find jobs. Trade deficits usually dip during economic slowdowns, and the 1 percent's income share does too. Still, it has now been almost seven years since the recession ended, and the U.S. economy is currently one of the strongest on the planet (which isn't saying much, but still). This cyclical explanation, while valid, is getting a little tired.

There's also other data one can examine. The immigration skeptics at the Center for Immigration Studies estimated this month that if you include the U.S.-born children of immigrants in the undocumented-immigrant total, that number has kept rising and was at 15.7 million in December. As for the trade deficit, most of the decline has been about oil. Low prices and the U.S. fracking boom have shrunk the trade deficit in petroleum products, even as trade deficits in manufactured goods have remained steady or grown.

On economic inequality, a recent paper from Saez and his University of California at Berkeley colleague Gabriel Zucman estimates that wealth inequality has kept growing even as income inequality has stalled. The top 1 percent's share of U.S. wealth in 2012 (the most recent year for which they have data) was, at 41.8 percent, the highest it has been since 1939. Also, a report out today from the Economic Policy Institute shows that recent wage gains have been highest for those in the upper income brackets.

Where does that leave us? The seeming improvement in the trade picture can, I think, be largely discounted. Yes, the amazing shrinking petroleum trade deficit is real, and that's great (it's also something that Sanders and Clinton might want to consider when they talk tough about fracking). But political complaints about trade mainly have to do with manufacturing, and the trade picture there doesn't seem to be improving. With inequality and illegal immigration, on the other hand, there are actually some moderately hopeful signs, for those who wish to see them. But the pessimists can find evidence for their worries, too.

  1. I decided to split the ideological difference by using "illegal" for the immigration and "undocumented" for the immigrants. The chart, you will note, goes with "unauthorized."

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Zara Kessler at zkessler@bloomberg.net