I’m not a historian, but as far as I know,
America has never seen anything like the current political craziness. There
have been bitter disputes within Congress — in 1856, Charles Sumner, an
abolitionist senator, was attacked and severely injured by a proslavery
representative. But these were conflicts between parties, and slavery was
nothing if not a substantive issue.
اضافة اعلان
This time, however, the craziness is entirely
within the Republican Party, which has just decapitated itself, and the insurgents
don’t even seem to have any coherent demands. Many people have been calling the
GOP a “clown car” and understandably so. This is a party that seems incapable
of governing itself, let alone governing the nation.
Yet Americans, by a wide margin, tell pollsters
that Republicans would be better than Democrats at running the economy. Will
they continue to believe that? The fate of the nation may depend on the answer.
Regular readers know that I’ve been trying to
make sense of negative public perceptions of the economy since the beginning of
last year. At the time some of the economic news was bad: Inflation was high,
and wages were lagging behind prices, although job growth was very good. So it
made sense for Americans to be somewhat down on the economy, but it didn’t seem
to make sense for views of the economy to be as negative as they had been
during the depths of the 2008 financial crisis or circa 1980, when America had
both high inflation and high unemployment.
Since then, however, the puzzle has become
much deeper. The economic news in 2023 has been almost all good — indeed,
almost surreally good. Inflation has come way down. Most measures that try to
get at “underlying” inflation, extracting the signal from the noise, indicate
that we may be getting close to 2% inflation, which is the Federal Reserve’s
target. This suggests that the war on inflation has been largely won — and this
victory has come without the large rise in unemployment some economists had
insisted was necessary.
Furthermore, wages are no longer lagging
behind inflation. Most workers’ real wages — wages adjusted for inflation — are
now significantly higher than they were before the pandemic. (Pandemic-era wage
numbers were distorted by large layoffs of low-wage workers.)
As a recent analysis in The Economist pointed
out, given the historical relationship between economic fundamentals and
sentiment, you would have expected Americans to be feeling pretty good about
the economy right now. Instead, they’re feeling very gloomy — or at least
telling pollsters that they feel gloomy. The Economist, not mincing words, says
that “Americans’ opinions about the state of the economy have diverged from
reality.” And voters appear to be more down on Democrats’ economic management
than ever. Why?
There are two main stories being used to
explain bad feelings about an objectively good economy.
One story is that we’re in a “vibecession,” in
which people are buying into a negative narrative — to some extent purveyed by
the news media — that is at odds not just with data but also with their own
experience. Indeed, surveys show a huge gap between Americans’ view of their
own financial situation, which is pretty good, and their views of the economy —
that is, what they think is happening to other people. The notion that there’s
a disconnect between perceptions of the economy and personal experience seems
to be validated by the fact that consumer spending remains robust despite low
economic confidence.
“Americans’ opinions about the state of the economy have diverged from reality.”
I’ve been particularly struck by what people
say about the news they’ve been hearing. We’ve gained 13 million jobs since Joe
Biden took office, yet Americans consistently report hearing more negative than
positive news about employment.
That said, there’s another possible
explanation for bad economic feelings: Americans may be upset that prices are
high even though they’re not rising as fast as they were last year.
Now, there has to be some statute of
limitations on how far back people’s sense of “normal” prices reaches; I doubt
that people are angry because you can no longer get a McDonald’s hamburger for
15 cents. But public perceptions of inflation may depend on the change in
prices over several years rather than the one-year-or-less numbers economists
usually emphasize. And if you measure inflation over, say, the past three
years, it hasn’t come down yet (which is a contrast with 1984, the year of
Morning in America, when short-term inflation was around 4% but three-year
inflation was steadily falling).
Which story is right? There’s probably some
truth to both: Americans are upset about past inflation, but they also have
false perceptions about the current state of the economy.
The big question politically is whether these
negative views will change in time for the 2024 election. Will people finally
hear about the good news? Will they still be angry in November 2024 that prices
aren’t what they were in 2020?
Honestly, I have no idea. Objectively, the
economy is doing well. But perceptions may not match that reality, and
Americans may, as a result, vote to send in the clowns.
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