When it comes to economic news, we’ve had so many wins that we’ve grown tired of winning, or blathering about it anyway. Last week, we released another impressive jobs report – 39 consecutive months of job growth – but it feels like almost no one noticed. In particular, it’s unclear whether this good news will shatter the still-pervasive but false narrative that President Biden is in charge of a bad economy.
Let’s start with the facts. Job creation under the Biden administration is truly astonishing, especially when we think back to the confident and mistaken predictions of a recession. Four years ago, our economy was hit hard by the COVID-19 pandemic, but we have come back even stronger. Four years after the start of the 2007-2009 recession, total employment was still down by more than 5 million people. Now that number has increased by nearly 6 million people. The unemployment rate has remained below 4% for 26 consecutive months, the longest period since the 1960s.
Inflation spiked in 2021-22, but this rise has largely subsided. However, most workers’ incomes have increased in real terms. Over the past four years, wages for non-supervisory workers, who account for more than 80% of private-sector employment, have risen by about 24%, but the rate of increase in consumer prices has slowed to about 20%.
So why do so many Americans still tell pollsters that the economy is in bad shape?
In many cases, those who claim that we are in a “vibe session” where public perceptions are out of touch with economic reality are labeled elitists who are out of touch with people’s real-life experiences. Masu. And all kinds of commentary is being made to the effect that if you look closely at the data, you’ll see that the economy is really bad after all.
But such commentary is an attempt to explain something that is not happening. Without a doubt, there are Americans who are hurting economically. Sadly, this will always be true to some degree, especially given the weakness of America’s social safety net. But in general, Americans are relatively optimistic about their finances.
I recently wrote about several Quinnipiac polls in battleground states that asked registered voters about both the economy and personal finances. In both Michigan and Pennsylvania, states crucial to the outcome of this year’s presidential election, more than 60% of respondents rated the economy as not very good or not bad. A similar proportion said their situation was excellent or good.
Americans are optimistic, and not just about their situation. They are also optimistic about the local economy. A recent Wall Street Journal poll of voters in swing states found that while voters had negative views about the domestic economy, they had far more positive views about their state’s economy. It turned out that This is consistent with the Federal Reserve’s 2022 Report on Economic Health (released in 2023), which rated the local economy as good or better than the percentage who similarly rated the national economy. It has been shown that the proportion of Americans is much higher.
Basically, Americans are saying, “I’m okay, everyone I know is okay, but something bad is happening somewhere.” “When it comes to the economy, mood and facts are at odds,” the magazine’s Greg Yip wrote.
What explains this disconnect? Inflation certainly contributes to bad sentiment about the economy. A new study by Stefanie Stancheva of Harvard University confirms an old insight. When both wages and prices are rising, people tend to believe that what they have gained through higher wages is that inflation has taken away their hard-earned gains.
But inflation aversion alone doesn’t explain why people think the country is in shambles while their state is doing well.
The elephant in the room is mainly the elephant, but there’s also a little donkey, and that’s partisanship. These days, Americans’ views on the economy tend to be determined by their political affiliations, rather than the other way around.
Although this is true for supporters of both parties, statistical analysis shows that the effect of partisanship on economic perceptions is much stronger for Republicans. For most of last year, Republicans were about as negative about the economy as they were after the 2008 financial crisis. So the fact that a Democrat is president reduces average consumer sentiment. To discuss economic perception without taking this factor into account is to miss a large part of the picture.
It’s not difficult to understand where this asymmetry comes from. Republican politicians and the media have united to completely destroy the Biden economy, even as President Donald Trump says the Biden economy is “collapsing into a cesspool of destruction” with “no stock in the stores”. However, this is not true at all. Democrats, meanwhile, are divided, with some progressives downplaying the economy, worried that acknowledging the good news will undermine their case for strengthening the fragile social safety net.
In my opinion, more progressives should celebrate the current economy. Not just to help Biden win re-election, but because economic success is a testament to his progressive vision. I would argue that Mr. Biden deserves some credit for bringing good news, but more importantly, policies such as Obamacare expansion and student debt relief have depressed the economy contrary to conservative expectations. That means no. Please call me more.
The truth is that the U.S. economy is an amazing success story. Don’t let anyone tell you it doesn’t happen.
