How Real Is the Squeeze?

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Jonathan Thornton finally found a job this spring after six months of unemployment. "My wife and I almost parted ways after 13 years because of the financial strain," he says. When he started work in April as a crane operator at a screw manufacturer in the Cleveland, Ohio, area, Thornton treated his wife Rita to a few little luxuries--a day at the salon, an evening out with the girls. "My outlook has definitely brightened," he says. But Thornton's optimism goes only so far. His paycheck has grown, but the family is still just getting by. Thanks to rising gas prices, "it costs me $85 a week to fill up my truck," he says. He worries about paying his variable-rate mortgage and Rita's student loans now that interest rates are higher. "I wouldn't say the economy is getting any better," he says. "The rich are getting richer, the poor are getting poorer, and the middle class is carrying all of them."

Thornton seems to be caught in what the Kerry-Edwards campaign is calling a "middle-class squeeze" as the duo tries to win votes in swing states like Ohio. How real is it? There's supposed to be an economic recovery under way. But the numbers paint a confusing picture. GDP grew 3.9% in the first quarter, and corporate profits rose 1.7%. Most important, payrolls have grown by 1.3 million jobs since January. Consumer confidence is up. But job growth slowed in June, and the new ones haven't been enough to meet the supply of 8.2 million out-of-work Americans. The unemployment rate hasn't budged from 5.6%. Wages, which grew 2.2% in May, aren't keeping up with inflation, at 3.1%.

Not surprisingly, the two parties spin these numbers differently. Republicans emphasize the recovery's upward arc, while Democrats point out the gaps developing along the way. "This is the worst job recovery our country has had since the 1930s," says Gene Sperling, an economic adviser to Kerry. "Most Americans have a higher standard for economic growth." Republicans say Democrats are ignoring all the hopeful signs. "What you've got is folks who are searching for negative statistics," says Ken Mehlman, the Bush-Cheney campaign manager.