How dare I disagree with the public!
Some of the populists that infest my comment section have challenged my claim that the economy is doing well, despite 51% of the public rating it as “poor”. They suggest that I am arrogant to disagree with the general public. After all, doesn’t the average American understand his or her economic situation better than a pointy headed intellectual?
Yes, they do understand their own situation better than I do. And when asked how they are doing, they tend to respond that their own financial situation is pretty good:
The Axios Vibes poll has found that when asked about their own financial condition, or that of their local community, Americans are characteristically optimistic. . . . 63% of Americans rate their current financial situation as being “good,” including 19% of us who say it’s “very good.” . . . Americans who believe their community’s economy is strong outnumber those who think it’s weak. They’re right.
I agree! The average American only knows a tiny fraction of the 330 million people who live in this huge country. They have only two ways to evaluate the performance of the overall economy—their local situation, and what they read about the national economy in the media. So why are people more negative about the overall economy than they are about their own personal finances? There are several factors at play:
1. The news media is relentlessly negative. Thus people typically praise the school their children attend, even as they suggest that America’s educational system is going down the tubes.
2. One sector of the public is now highly irrational. In recent years, most GOP voters have become completely unhinged. (Look at the lunatic they just overwhelmingly voted for in the North Carolina gubernatorial primary.) When asked how the economy is doing, GOP voters fear that if they say “good” it will be viewed as an endorsement of Biden. Thus they overwhelmingly say “poor”. Dems are also biased, but far less so than Republicans. Ditto for the media. Both sides are biased, but the GOP media is far more biased.
In the past, the loonies were evenly distributed between the two parties. Lots of Dems thought 9/11 was an inside job. But in recent years most of the conspiracy nuts are moving toward the GOP, producing a very unbalanced situation. Indeed belief in absurd conspiracy theories is now almost a requirement if you wish to avoid the label “RINO”. “Of course Trump won the 2020 election!”
Put it all together and you have a situation where polls on the condition of the economy are essentially meaningless. The only poll that matters is the one asking people how they themselves are doing. And by that measure the economy is fine.
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6. March 2024 at 15:56
Chronic and worsening housing shortages may be noticed by the general public and accurately so.
Does any typical wage earner feel prosperous if they pay West Coast rents?
7. March 2024 at 00:17
I agree with you on the economy, but I think that Democrats actually embrace a lot of objectively crazy beliefs that have undergone credibility laundering through endorsement by the media. For example:
* Rich people don’t pay taxes.
* The tax system favors investment income over labor income.
* Black people are killed by police at dramatically higher rates than white people because police are racist.
* The US is rich because of slavery.
* The middle class is dying, and the median American today has a lower standard of living than the median American in the 50s.
* Henrietta Lacks was horribly wronged by the research done on medical waste taken during the free cancer treatment she was given.
* “Get your government hands off my public schools.”
* The SAT just measures your parents’ income.
And this is just the mainstream “respectable” stuff. The BlueAnon stuff you see from the leftmost 10% is even nuttier!
7. March 2024 at 01:07
Scott,
good points, however I might add the following thoughts which run counter to the gist of your argument:
a.) people do not just care about material things (jobs, income, etc.), I have seen many dissatisfied rich people…
b.) everybody rates the things/schools he owns highly – it called the endowment effect. It is not inconsistent to lament the general state of things while beeing allegedly “satsified” with your own things/choices. So take those pols with a grain of salt…
If you go to public spaces in the US, do people behave in a way that suggests they are satisfied with their lives?
7. March 2024 at 04:51
Scott, I posit the reason you are so sure Democrats are less unhinged than Republicans is because you are fixated on issues like abortion-on-demand and drug legalization. I expect you oppose special privileges for union bosses, but a candidate who is for them 100% can be “reasonable” from your perspective, whereas a candidate who thinks abortion is morally wrong, even if he doesn’t support an across the board ban, is a “nut.” So your opinion on such matters isn’t worth anything to anyone who doesn’t share your values.
7. March 2024 at 05:00
E.g., there is no more evidence for the notion that Trump won in 2016 because of Russian interference in the election than that he lost in 2020 because the election was “stolen.” Both theories are inanene. But proponents of the former theory don’t trouble Scott at all, and somethimes he seems to agree with them. Proponents of the latter theory are idiots. This is one reason why many Americans properly have contempt for the “elite,” although, IMO, on issues like trade and immigration, the “elite” are right and ordinary people are largely wrong. The conclusion Scott falsely draws is that the elite have better judgment than ordinary people. They don’t. They just have bad judgment about different matters.
7. March 2024 at 06:59
Yes; the behavior of both HRC and Trump after they lost was disgraceful -but Trump’s was clearly more disgraceful -HRC at least stated
“We have seen that our nation is more deeply divided than we thought. But I still believe in America and I always will. And if you do, then we must accept this result and then look to the future. Donald Trump is going to be our president. We owe him an open mind and the chance to lead.”
I don’t have a problem with whoever leaked HRC’s Goldman Sachs speech transcripts -and their contents are the responsibility of HRC, not whoever leaked them.
7. March 2024 at 09:08
Brandon, Yes, I agree, although:
“The middle class is dying, and the median American today has a lower standard of living than the median American in the 50s.”
is also promoted by Tucker Carlson types, isn’t it?
Viennacapitalist, When thinking about weird poll results, it’s worth considering why the problem has recently become much worse. Yes, there are all sorts of reasons for various biases, but why the dramatic change in recent years?
Stan, No, my critique of GOP irrationality has nothing to do with “the issues”. Claims that the 2020 election was stolen is not “the issues”. Claims that the economy is poor is not “the issues”.
Your second comment is so stupid I won’t respond.
7. March 2024 at 18:45
1. The media has not been overwhelmingly negative when it comes to this administration. Indeed, most of the mainstream outlets, other than Fox, spend hours telling Americans how wonderful the economy is. MSNBC ran a months long campaign with “trusted experts” (hand-picked of course) who tried to convince Americans that inflation was a “good thing” and that if you are struggling to buy foods you can always “eat more cereal”. Or as Schwab likes to say: “eat the bugs”
They ran ad, after ad, even a superbowl ad, that villified businesses for raising prices to offset their increased costs (inflation).
2. And yes, calling 70M people irrational and part of a “cult” is arrogant.
But this is your modus operandi. And I must say it’s a bit weird. I’m sorry, but there is something very creepy about a person referring to themself as ‘elite’ and ‘intellectual’. Real intellectuals have more humility.
70% of Americans have less than $1000 dollars in their bank accounts, and a $20 minimum wage, sadly, isn’t enough to live on because the prices of goods and services have outpaced wage rates. Gas is $7 a gallon in some places in California. That means 1/3rd of minimum wage labor goes to one gallon of gas.
Not a fan of minimum wage at all, but when 1/3 of your labor only buys 1 gallon of gas, I’d say that’s not a very good economy — at least not for those earning $20 an hour. I really don’t know how they survive.
It amazes me that over a hundred years the monetary economists have managed to destroy the middle class, debased our currency, especially since the end of Bretton Woods. Yet, after such a poor record, these monetary morons (sorry) still have the audacity to call their critics “irrational.”
Precisely, who is irrational? Is it the majority of Americans who want to end the Fed for destroying their lives. Or is the economists (some of them) who still clamor for control over the supply of money?
Nobody should be concerned about the word “populist.” Washington, Jefferson, Adams, Madison, Jackson, Grant, Lincoln, were all populists. Theodore Roosevelt was a populist; Kennedy was a populist; FDR, as much as I hate him, was also a populist.
And yeah, Trump doesn’t like you. You don’t like him. And it’s going to be a battle for the ages. It’s a battle between the blue collar working class in this country, who want to recapture the American dream from the corrupt grips of the so-called “elite”. Trump is their choice. He’s politically incorrect, and he doesn’t give a flying **** about your refined sensibilities. The elite on the other hand, seek to capture the means of production, merge state with corporation, and enslave the working class for their own benefit.
I know what side I stand on.
7. March 2024 at 20:27
Sumner is now lamenting that the propaganda isn’t strong enough.
If only the media wasn’t so negative, he says. If only the negativity didn’t convey the wrong message. The idiots believe the negativity, when all the smart people – like him – know that the economy is really good.
It’s not the higher prices, the inability to find a house. That’s not important. You don’t need those things. Eat lentils.
Would you feel better if we only distributed preapproved messages from Scott Sumner? If only your preapproved messages aired on T.V., do you think that people would agree with you? Or do you think maybe they’d still draw their own conclusion when shopping?
And you wonder why some commenters call you arrogant?
7. March 2024 at 21:44
Edward,
What would you have the federal government do about high housing prices, which are primarily the result of housing shortages due to local laws and regulations?
8. March 2024 at 01:02
“people typically praise the school their children attend”
One exception would be the parents that showed up at school board meetings to complain about critical race theory and other propaganda being taught at their children’s schools. Since parents typically think their own schools are fine, the dispassionate side of my brain tells me that maybe their concerns were valid.
8. March 2024 at 07:36
As Scott has said many times in the past, it does not matter which party is in power as it relates to a good or bad economy. Obviously it is a more complex issue than what president is in power.
I have this sense that the crazies on either side of the political spectrum (media mostly)have little impact on almost everything. They may even be beneficial. It gets us all focusing on nonsense , leaving less time to focus on real issues —-which makes us less likely to ruin economic issues.
Equities hit all time high—Nasdaq is crazy high—-that’s good I assume. I also do not recall a time when the political opinions have been so fractured——while also being irrelevant.
I think we are in pretty good shape—-politics is for nut jobs. They don’t matter.
I have become an optimist.
8. March 2024 at 07:57
I understand your point.
Somebody who reads a great deal is often, although not always, able to make better decisions than those who don’t. Daring to disagree with the public is reasonable.
But you also have to understand that each individual is best able to assess if they are better or worse off than they were compared to another point in time.
You also have to understand that not everyone benefits from globalism. If 75% lose, 25% win, then that is not good.
That’s what’s happening. And that’s why aggregates are not always good indicators. While globalism is a net gain overall, it’s not a net gain for the majority. The poll numbers consistently show that. Both the left and the right are sick and tired of supranationals and free trade agreements, that give people like the Cheney’s and Bain capital special permits, allowing them to operate tax free in economic zones while mom and pops suffer. That’s not freedom. They call it “free trade” but it’s not free trade.
As Sara said, it’s sort of become a way to establish corporatism (or she said merger between state and corporation). I think it was Mussolini who said that fascism shouldn’t be called fascism. It should be called corporatism. The threat of fascism is not coming from Trump. It’s coming from Bezos and Zuckerberg, and Blackrock and State Street.
A good example of elitism is Cheney’s recent rant about 8 months to “save the republic”.
I mean, C’mon. Get a grip. What she really means to say is that we have 8 months to save the Cheney financial portfolio, which is 100% dependant on government inervention in the marketplace. She benefits from permits and backroom deals.
How can you support that? How does an economist worth their salt, sit their with a straight face, and actually subscribe to this kind of cronyism?
You’re old enough to remember 2004. Don’t you remember when Cheney was considered Darth Vader? Do you remember the 2004 Kerry campaign, where the media labeled the Cheney’s one of the most corrupt families in America? And they are corrupt. In 2004, they were telling the truth.
But in 2024 the Cheney’s are suddenly heroes?
Do you see the contradiction here?
8. March 2024 at 08:48
@Scott,
„…why the radical change in recent years…“
As mentioned under a): people don‘t just care about gdp growth and jobs.
they care about percieved fairness, they like to belong to a group/family, etc.
Moreover, even objective, alternative measures of well-being, such as, life expectancy (dropping in the US) which economic historians like to use point into the opposite direction.
As for schooling: just look at the evolution of PISA results in western Europe- it objectively points into the wrong direction. many such examples.
8. March 2024 at 09:14
Prof. Sumner,
Since you’re a pessimistic 2024 presidential election result forecaster, I look forward to your take on Biden’s SOTU speech and various strong reactions to it.
8. March 2024 at 09:50
viennacapitalist. Why did people think the economy was good under Trump (as crime rose and life expectancy fell)?
Travis, I’ve lost interest in politics—didn’t see the speech. We’re a banana republic, so nothing good can be expected.
8. March 2024 at 13:40
@Scott,
your statement does not correspond to the facts. us life expectancy:
2019: 78.79
2022: 77.5
I took two years which with minimal Covid impact. this is a significant drop, not a triffle.
as regards your second statement: I guess growth with a, say 3 percent budget deficit (Trumps first term, if I remember correctly) is qualitatively different, i.e. feels different at the micro level from growth or full employment with a deficit of up to 8(!!!) percent. just becsuse we cant predict exactly what will happen when, we can say with high confidence that this is not a healthy development
8. March 2024 at 13:41
Biden exceeded low expectations. The Republicans are typically better at messaging than the Democrats, so the expectations they’ve helped set for Biden are so low, that exceeding them can help help boost him.
9. March 2024 at 08:01
Viennacapitalist, Your memory of Trump’s fiscal policy is wrong, it was a complete disaster.
And are you claiming life expectancy didn’t fall under Trump? Please explain.
10. March 2024 at 09:56
People are upset at an overheating economy.
Yes it does mean higher nominal wages and stock market in the short term, but it also means high interest rates, 3% inflation, understaffed workplaces, and lots of uncertainty.
Normal polling doesn’t work because we haven’t had an economy like this since maybe the 70s.
10. March 2024 at 11:02
@Scott,
The highest deficit under Trump (ex 2020 which we cant count due to Covid, if you agree) was 1 trillion in 2019, whereas last years deficit was 1.8 trillion- nominal GDP hasn‘t grown by 80 percent since 2019 which means the deficit is way higher (I am ignoring the covid years, for obvious reasons)
same for life expectancy: untli 2019 it had been steadily rising, the drop started with Covid and has not fully recovered although Covid is not an issue.
if you ignore 2020 – unless u want to blame Covid on Trump- life expectancy was NOT decluning during Trump‘s first term. I am not saying Trumps policies led to incresing life expectancy or the like. I am merely pointing out that alternative indicators of well beeing (wealth inequality would be another) do not point into the same direction as real gdp…
10. March 2024 at 11:16
This isn’t complicated, for the most part. Housing construction slowed greatly during the pandemic for obvious reasons, helping cause housing prices to spike. The rate of new housing construction did not pick up enough after the pandemic to bring housing prices down much, if at all, due to zoning and other restrictions. It appears that the rates of housing construction were capped in many cities prior to the pandemic, and those rates did not adjust after the crisis.
Look at housing inventories in my town of Jacksonville, for example:
https://fred.stlouisfed.org/graph/?g=1i6In
And here’s a measure of prices:
https://fred.stlouisfed.org/graph/?g=1i6It
Many Americans spend between 25% and 33% of income or more on monthly mortgage or rent payments. This is obviously not a trivial reduction in net real income. And this is after housing costs for many have risen above the rate of inflation for many years.
This is in the context of healthcare and higher education costs that have also risen faster than inflation for a long as many have been alive.
10. March 2024 at 12:09
@Scott,
and yes, fiscal policy under trump was a disaster, it is even worse now..
10. March 2024 at 15:57
Bobster, We didn’t have an economy like this in the 1970s. A closer analogy would be 2006, or 1989.
viennacapitalist, You said:
“The highest deficit under Trump (ex 2020 which we cant count due to Covid, if you agree) was 1 trillion in 2019”
At the time, it was by far the worst fiscal policy in US history. Biden is even worse, and Trump II will be even worse than Biden. But it was Trump that first put us on the road to disaster (not previous presidents.) It’s not complicated.
I notice that Trump supporters wish to ignore 2020 when it helps their cause, but also love to include 2020 when it helps their cause (as with low gasoline prices in 2020).
These arguments are just silly—food for stupid people that think presidents have magic wands. For instance, I’d never argue that Trump caused the high crime of 2020, and it’s absurd to claim he’ll stop crime if elected.
BTW, US life expectancy has been doing relatively poorly for many years (partly due to Fentanyl):
https://laist.com/news/live-free-and-die-the-sad-state-of-us-life-expectancy
10. March 2024 at 17:51
Scott, that’s interesting.
Both in 1989 and 2006 voters had low approval of the economy.
But now we’re told that we should approve of the economy.
10. March 2024 at 23:46
Scott,
“…I notice that Trump supporters wish to ignore 2020 when it helps their cause…”
a.) I am an Austrian, I do not vote in the US.
b.) I thought it prudent to exclude 2020 when discussing long-term health statistics and deficits for what I thought obvious reasons. I am surprised you seem to think this is a political choice. (You might have noticed that I also excluded 2021, Biden’s first year and the worst on the metrics mentioned…)
c.) True, US health has been doing poorly for many years realtive to peers, but an outhright decline did not happen before.
Just this morning I came across this article by Angus Deaton which puts the gist of the matter much better than I can do in a comment section of a blog. He seems to be puzzled by the same questions we are discussing here and here are his thoughts. Worth a read:
https://www.imf.org/en/Publications/fandd/issues/2024/03/Symposium-Rethinking-Economics-Angus-Deaton
13. March 2024 at 15:48
Bobster, I don’t agree. Voters were more positive during those previous years, at least compared to recent poll numbers. Reagan was highly popular when he left office in 1989, mostly due to the good economy.
Viennacapitalist, I fail to see your point. You were the one who brought up life expectancy dropping in the US. If you now want to argue that your previous argument was highly misleading due to Covid, then I agree!
13. March 2024 at 16:46
Scott: I can’t argue with your point on the economy. But your claim about the distribution nutcases between the two parties is *bizarre*. I can’t help but wonder if you’re out there somewhere in the Andromeda system viewing the world through Democrat Party National Television.
Nut cases? Warren is a nutcase. Jayapal is a nutcase. AOC is a nutcase. Kerry is a nutcase. Buttegieg and his racist freeways is a nutcase. Biden himself is a nutcase. He thinks he’s living in the Great Depression, he has no idea that the price of Cheetos has doubled because that’s where his student loan forgiveness money has been spent! Look at the gov of NYC. The sactuary movement. The border situation.
And the DEI thing.
And OMG, the Green quackeroos!! They’re living ina Dune novel or something.
Scott! Call home! Check in with earth!!
FYI: the Pax Romana came after the fall of the Roman Republic. What do you want, some democracy of retards or a decent society to live in?
14. March 2024 at 00:32
Scott
“…I fail to see your point. You were the one who brought up life expectancy dropping in the US. If you now want to argue that your previous argument was highly misleading due to Covid, then I agree..”
My point: life expectancy – an alternative measure of well-being – shows a worrying trend in the US which might hint at structural/socieatal problems GDP data does not (yet?) reflect.
If correct, this could be one explaination the growing tensions in US society that puzzle you so much.
Yes, I think picking 2020 and 2021 would be misleading, but taking 2022 is not, as i assume the Covid effect to be largely over (imunization of population as well as milder variant apearing at YE 2021). Do you agree with that?
This (not politics) is the reason I skiped those years most affected by Covid and made me compare 2019 (no Covid) with 2022 (no Covid impact by assumption). It is not that complicated, is it?
Somebody at Harvard too believes there are structural problems in US health care that explain the negative development in life expectancy. We can safely assume that the Harvard health department has heard about Covid…
https://www.hsph.harvard.edu/news/hsph-in-the-news/whats-behind-shocking-u-s-life-expectancy-decline-and-what-to-do-about-it/
Further, in order to support my argument, I have sent you an article by Angus Deaton which I hope you have read.
Deaton believes that the exclusive focus of economists on GDP might result in overlooking other important factors and it is time to supplement the analyisis with other metrics – I agree with him on this instance.
Conclusion: looking at metrics other than GDP shows negative societal trends which could be the reason for nasty poltics.
14. March 2024 at 07:47
Lots of Americans died of Covid in 2022, about 270,000.
So no, I don’t agree.
Longer term, the big problem in the US is drug overdoses.