In the February Money, I wrote about the Anxiety Economy and made the case that by some measures life has gotten harsher for middle class Americans over the past several decades. For example, family incomes have become a lot more volatile. And college educated workers are taking bigger hits to their income after they get laid off.

But in the upcoming March issue of the magazine, I write this about baby boomers:

Your adult life coincided with the one of the greatest investment booms in history. Over the past 30 years, large-company stocks returned 12.5% a year compounded, enough in theory to turn $1,000 into $34,000. In real life it wasn't so simple-- besides taxes and expenses, most of us eat away returns trying to outsmart the market--but that's a heck of a wind to have at your back....

Now remember what the world looked like in the mid-1970s, when you were just getting started. Vietnam and Watergate were fresh national wounds. The Arab oil embargo had pushed the economy into a deep recession. The stock market was still recovering from a major crash--the Dow had tumbled 45% from peak to trough--and annual inflation topped double digits. A cover story in this magazine offered advice on coping with the soaring price of meat, milk and margarine. Seriously.

America's economy--and even more so its markets--has traveled a long way in three decades.

Alright, Regnier, which is it? Has the economy gotten better over the past few decades, or worse?

Better. No contest. But the picture I painted last month isn't actually contradicted by what I wrote this month. To the contrary, the increased volatility and risk that we live with as individuals may just be the flip side of the same forces that have made the overall economy more stable. Or that's what Congressional Budget office director Peter Orszag suggests--rather tentatively--in his recent testimony before the House Ways and Means committee. Here's Orszag:

To the extent that earnings and income variability has increased, the phenomenon may be consistent with--and indeed perhaps part of the explanation of--the decreased macroeconomic volatility described earlier. For example, more-flexible labor markets could enable the economy to adjust to changes in the economic environment more quickly but also could mean that individuals change jobs and have their wages change more frequently.

Some economists call the smoothing out of the economy since the 1970s "The Great Moderation." Nobody is entirely sure what caused it--it could partly be luck--and it would be way, way too much to say that lower inflation and more-predictable economic growth has simply come at the expense of ordinary people. Rapid inflation hurts anybody who saves or who wants to plan for the future, and Americans' standard of living has clearly improved since the 70s. And, of course, economic stability has probably been a plus for the stock market, and lots of regular people own stocks in one form or the other. One reasonable argument for government programs that expand stock ownership--whether through Bush-style private accounts in Social Security, or through the "add-on" accounts Democrats favor--is that it can, in a sense, diversify people's economic exposure. Gene Sperling, a former economic adviser to Bill Clinton and a passionate advocate of the Universal 401(k), put it to me this way: "If more of the gains from higher productivity and globalization are going to investments and capital as opposed to wages, it cushions the blow if you have investments."

But the Great Moderation also complicates your investment outlook a bit. As this story in yesterday's Wall Street Journal points out, yields on bonds are way below their long-term average. That's wallstreetspeak for saying that bond investors are confident about the future and so are willing to pay to pay quite a lot for bonds these days, which means you can't expect to make very much on them in the future. (Yes, inflation will probably be low, too--but not in health care, which retirees care about a lot, the Journal observes.) The same is probably also true of stocks--over the past century or so, equities have earned better that 10% per year compounded, but many economists and market watchers expect long-term gains will go down in the future. Did the Great Moderation help drive up asset prices? It's arguable, but tough to rule out.

In every silver lining, a cloud.