How Real Is the "Squeeze"?

By Jyoti Thottam

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.

That may be so, but plenty of Americans are still feeling overstretched and underpaid, and there is some evidence that Edwards' populist message, which helped win him a spot on the Democratic ticket, is resonating with voters: in last week's TIME poll, 51% of the likely voters interviewed said they agreed with his claim that the government under Bush benefits the rich at the expense of the middle class and the poor, and that view is shared by 55% of those who described themselves as independents. Brenda Keen, 49, a business manager for a University of Georgia literary journal, says Kerry's concern for the middle class is a big factor in winning her vote. "It's a struggle to have what's accepted as a middle-class American lifestyle," she says. Keen, the single mother of a 10-year-old, worries that even with a 3% raise--her first raise in two years--to her $36,000 salary, meeting the rising interest rates on a $3,000 home-repair loan will be a stretch. And yet not every cautious consumer is in the Kerry camp. After several months of joblessness, Jesse Roecke, 46, of Midland, Mich., will soon start work as a senior executive for Goodyear Tire & Rubber. He's more frugal now but unwilling to accept Kerry's rollback of tax cuts. "I believe there's a broad-based recovery," he says. "Bush was on the right track."

Even those who are ready to open their wallets are doing so carefully. Michelle Nance, 34, starts work this week in San Francisco as a nurse. She's planning a long-delayed visit to the dentist and the purchase of a new set of tires. But with $40,000 in student loans, "I'm not going to go out and buy a flat-screen TV," she says. Wal-Mart and Target both reported declines in sales growth in June. A drop in consumer spending, which accounts for two-thirds of the economy, could slow the recovery. "We're watching that very carefully," says Duncan Meldrum, president of the National Association for Business Economics. "I'm hoping this is just a pause." The Bush campaign must hope so too. --By Jyoti Thottam. With reporting by Perry Bacon Jr. with Kerry, Anne Berryman/Athens, Matthew Cooper/Washington, Daren Fonda/Los Angeles and Chris Maag/Cleveland

With reporting by Perry Bacon Jr. with Kerry, Anne Berryman/Athens, Matthew Cooper/Washington, Daren Fonda/ Los Angeles and Chris Maag/Cleveland