The performance of the U.S. economy over the past two years has been particularly remarkable given the dire predictions of many observers: Remember the economists who predicted a recession in 2023 and warned that years of high unemployment would be needed to keep inflation in check?
On the contrary, our economic growth has become the envy of other wealthy countries. Stocks have risen significantly since President Biden took office. Inflation has fallen sharply and the unemployment rate remains below 4%. The latest numbers seem to support the view that the apparent price increases earlier this year were a statistical blip and that deninflation is here to stay.
Yet there remains strong public sentiment that Biden should not tout his economic performance. The Washington Post editorial board just wrote, “Telling Americans the economy is doing well doesn’t work.” The Financial Times editorial board wrote, “The president’s March Nation of the Nation address was full of economic hyperbole,” but that message “risks negating the experience of voters on the ground.” In other words, they’re saying Biden shouldn’t talk about his economic performance, and even suggesting he should try to relate to voters by acknowledging that the economy is doing poorly, when in fact it isn’t.
Now, I’m no political strategist or political historian, but I think I know enough to say that a 21st century reenactment of Jimmy Carter’s infamous so-called Depression Speech would be a bad idea.
But it would also be a bad move to ask voters to pull themselves together and realize how fortunate they are. But has anyone in the Biden administration ever said that? If so, it would be pretty insensitive. But I don’t know of any examples. As far as I know, administration officials, including Biden himself, talk about low unemployment, falling inflation, and rising real wages, carefully avoiding the hyperbole and excessive boasting that was so common in the previous administration. But even mentioning good news about the economy is said to be an insult to ordinary Americans, because it is tantamount to denying their lived experience.
At this point, I want to make a point I’ve made repeatedly for a long time: There is overwhelming evidence that the majority of Americans have a negative view of the economy. do not Reflect their lived experiences.
A relatively new example is fast food. Online lending marketplace LendingTree recently released a survey that found that roughly 80% of Americans say inflation has made fast food a luxury item and that they eat it less frequently. In fact, the price of fast food has increased significantly in the past few years.
But the price hike hasn’t lived up to the legend. Headlines about McDonald’s prices doubling usually come from 10 years agobut it’s still wrong.
A few days after the study’s findings were released, McDonald’s executives published an open letter refuting exaggerated claims about the chain’s prices. McDonald’s reported that the price of a Big Mac hasn’t doubled since 2019 (the last full year before the economic shock caused by the COVID-19 pandemic), but has instead increased by 21%. That’s still a big increase, but it’s lower than the increase in average worker earnings over the same period.
And it’s worth looking at what people are actually doing: Spending at restaurants increased 7 percent from March 2023 to March 2024. Some of this is due to inflation, but not all of it, so it looks like Americans are buying significantly more of the luxuries they say they can’t afford.
To be clear, no one is saying Biden administration officials should tell the public to sit down, eat their Happy Meals, and stop complaining. And from my own conversations, I can tell you that these officials are well aware of their limited power to change a widely entrenched negative narrative about the economy, even if inaccurate. But asking Biden to stay silent about good economic news seems to be, in effect, saying he should legitimize misinformation, especially when there is plenty of good economic news to talk about. Why would anyone think this is a good idea?
Well, here’s my take: As I said before, I’m not a political consultant, but those who tell Biden to downplay the fact that his massive spending has had a positive effect on the economy are, to some extent, revealing their own ideological biases rather than giving solid political advice.
The situation today is not dissimilar to what we saw in the early 2010s, when policy pivoted so quickly from fighting unemployment to an obsession with deficits that it became hard to make the case that aggressive government action really worked. Just as the Great Recession provided fodder for deficit hawks, the inflation spike of 2021 and 2022 became, for a time, their glory days.
But in the end, they turned out to be wrong. The nearly painless deflation of 2023 has largely vindicated Biden’s economists, who argued early on that post-COVID inflation would not be a repeat of the 1970s but would most closely resemble post-World War II inflation: a temporary blip that ended as supply chains normalized. The “temporary” part took a bit longer than expected, but they were basically right.
So how should Biden and his advisers talk about the economy now? I say tell them the truth as they see it. That’s what they’ve always done, as far as I know.
