I blame the nattering nabobs of negativism in the mainstream media who know little or nothing about economics, and who simply parrot the GQP talking points from right-wing media – who know even less about economics, and who are dissembling disinformation propagandists.
I miss Irving R. Levine, “the longtime NBC News correspondent whose easily accessible explanations of monetary policy, fluctuations in the Dow Jones industrial average and the intricacies of the global market helped make the economy a staple of television news.” Irving may have been the last of his kind because media companies today no longer do economics reporting, they instead interview politicians to present a left v. right political argument, and do not attempt to educate the public about complex economics issues. This is a massive failure on the part of the modern media, and the major reason why Americans are hopelessly ignorant about even basic principles of economics.
There are some rare exceptions, like economist Paul Krugman, who can sometimes be a little too wonky for some people to understand. Krugman explains, Why Are Americans So Negative About the Economy?
Almost a year has passed since the Bureau of Economic Analysis announced that the U.S. economy had contracted for two quarters in a row. Some people believe, wrongly, that two quarters of falling G.D.P. is the official definition of a recession. Economic negativity ran rampant, especially but not only on the political right.
The interesting question now is why, at least according to some surveys, the public remains very negative on the economy — as negative as it has been in the past amid severe economic downturns — even though those recession calls were clearly a false alarm, and the economy is actually looking remarkably strong. Or maybe the question should be why people say that they’re very negative on the economy.
This is a touchy subject, albeit one I’ve commented on before. You don’t want to say that Americans are stupid; you certainly don’t want to sound like that John McCain adviser who insisted that America was a “nation of whiners” who were experiencing only a “mental recession.”
On the other hand, there are now huge gaps between what people say about the economy and both what the data says and what they say about their own experience. And we have some new information on what lies behind these gaps.
First, about that much-hyped “Biden recession” [There has been no recession.] The actual definition of a recession involves several economic indicators, and aside from those G.D.P. numbers, nothing that has happened to the economy looks remotely like a recession.
So employment is at record levels, so is job satisfaction, and concerns about inflation have greatly receded. And people believe that the economy is in terrible shape https://t.co/0mIijXp9h1
— Paul Krugman (@paulkrugman) May 11, 2023
Since December 2021 the U.S. economy has added almost six million jobs while the unemployment rate has fallen from 3.9 percent to 3.4 percent, a level not seen since the 1960s. And no, unemployment isn’t low because Americans have dropped out of the labor force: The percentage of adults either working or looking for a job has declined, but that’s almost entirely a result of an aging population, and labor force participation is right back in line with prepandemic projections.
Black unemployment is at a record low of 4.7%.
Hispanic unemployment remains low at 4.4%.
The nation’s unemployment rate is at 3.4%, its lowest rate since 1969.
The Biden-Harris Administration's economic plan is working.
— The White House (@WhiteHouse) May 12, 2023
12.7 million jobs created
Unemployment rate fell to 3.4%
Nearly 800,000 new manufacturing jobs
Highest workforce participation in 15 years
President Biden is building an economy that leaves no one behind. pic.twitter.com/ia0SJsSEAC
— The Democrats (@TheDemocrats) May 12, 2023
And these are good jobs, according to workers themselves. According to the Conference Board, which has been surveying job satisfaction since 1987, “U.S. workers have never been more content.”
To be sure, the return of serious inflation after decades of quiescence rattled everyone, and not just because it reduced real incomes. (Real wages fell during Ronald Reagan’s second term, but people felt pretty good about the economy anyway.) One benefit of low inflation is that it gives people one less thing to worry about; according to the American Psychological Association, inflation was a major source of stress during 2022.
But inflation, while still elevated, has come way down. The inflation rate over the past six months was 3.3 percent, compared with 9.6 percent last June. The price of gasoline, a major political talking point last year, is now more or less normal compared with average earnings. [Except in Arizona.]
Wholesale egg prices are below where they were before the price spike so retail will follow shortly. https://t.co/QBkkCkNRHQ
— David Cay Johnston (@DavidCayJ) May 17, 2023
And people have noticed. In October, 20 percent of Americans named inflation as the most important problem facing the nation; that’s now down to 9 percent.
So what’s going on? The general rule seems to be that Americans are feeling good about their personal situation but believe that bad things are happening to other people. A Federal Reserve study found that in late 2021 a record-high percentage of Americans were positive about their own finances while a record low were positive about the economy. We don’t have results for 2022 yet, but my guess is that they’ll look similar.
Partisanship surely explains much of this divergence. A newly published study shows that who holds the White House has huge effects on views of the economy; this is true for supporters of both parties, although the effect appears to be about twice as strong for Republicans. The study also finds, however, that these changes in reported views don’t appear to have any effect on actual spending — that they reflect “cheerleading,” as opposed to “actual expectations.”
Beyond that, there’s good reason to believe that media reports about the economy have had a strongly negative bias. One thing that has gone really, really right in America lately is job creation, yet the public consistently reports having heard more negative than positive news about employment.
And let’s not let economists off the hook. As Mark Zandi of Moody’s Analytics points out, many economists have been predicting recession month after month for the past year. Sooner or later, a recession will no doubt happen, but as he says, “In my 30-plus years as a professional economist, I’ve never seen such recession pessimism,” even as the economy has remained resilient. And this pessimism has surely filtered through to the public.
So where does all this leave us? America hasn’t yet brought inflation back to prepandemic levels, and we may yet have an economic hard landing. But so far, at least, we’ve had a stunningly successful recovery from the Covid shock.
While many Americans tell surveys that things are terrible — which says something about how people respond to surveys and where they get their information — this doesn’t contradict that positive assessment.