(Axios)
Americans seem to be hopelessly mixed up on the economy, and that is alarming as we face an existential election in November 2024, where a vote for Joe Biden is one step toward maintaining the democracy that has served America well for roughly 250 years and made us the envy of the world. On the other hand, a vote for Donald Trump supports his plan to sweep aside our constitution and the rule of law and usher in an authoritarian system that likely will feature "government by Trump's whims" -- and those whims apparently will include retribution against his perceived political enemies (including executions), political prosecutions that have no basis in fact or law, flawed economic policies that could lead to inflation, recession, and trade wars and ... well, you get the idea. It's time for Americans to get up to speed about their own economy because our futures might depend on it.
How deep is the confusion and misinformation out there. Per an article at Axios, polls show a sizable chunk of Americans believe we are in a recession. But here's the deal: That is not true. Under the headline "More than half of Americans think the U.S. is in a recession. It's not," Emily Peck writes:
More than half of Americans — 56% — mistakenly believe the U.S. is currently in a recession and that Biden is responsible for a worsening economy, according to a stunning new poll conducted by Harris for The Guardian.
Why it matters: The economy is actually in good shape and there's no recession. But misperceptions like this are a huge political challenge for President Biden and an advantage for former President Trump as they vie for second terms.
Reality check: It can be difficult to know if a recession is actually happening — it's a call typically made after the fact by the National Bureau of Economic Research. (The NBER called the 2008 recession months after most people believed we were in one.)
What are the characteristics of a recession, and do Americans know how to identify them? What tends to be going on beneath the surface? Peck provides clarity:
- In order for there to be a recession, there typically needs to be a significant decline in economic activity.
- That's not the case now. The U.S. economy, as measured by GDP, is growing.
The big picture: It looks like inflation and the higher cost of living — indicators not typically part of the recession call by the NBER — could be shaping Americans' views.
- 70% of Americans said that cost of living is their biggest economic concern, followed by inflation at 68%.
- Two-thirds of Americans, including 65% of Democrats, report it's difficult to be happy about positive economic news when they feel financially squeezed each month.
- While the rate of inflation has slowed since its 2022 highs, it is still higher than most Americans are used to — and prices are up a great deal from 2019. Is that because Biden inherited an economic mess, driven by the COVID pandemic and featuring soaring inflation from Trump? An analysis from federalreserve.com shows how the pandemic, which Trump mishandled and lied about, caused on economic mess that landed in Biden's lap:
The Covid-19 crisis and its aftermath, including the policy responses, led to enormous changes in inflation. Prices for many items—especially gasoline, clothing, transportations services, and accommodations—fell during the sharp economic downturn in March and April of 2020, while prices of some other items—especially food at grocery stores—posted unusually large increases at that time. On net, the dominant pressure on inflation was clearly downward at the beginning of the pandemic. In the spring of 2021, however, prices for some items turned up sharply, and by the fall of 2021 the price increases had become widespread. By 2022, inflation had risen to levels not seen in 40 years. Inflation then began to recede and declined throughout 2023.
- The bottom line: Americans' mood about the economy does not match reality, Peck reports:
Zoom in: 55% of Americans wrongly believe the U.S. economy is shrinking this year rather than growing.
- 49% believe the S&P 500 is down for the year (it's up).
- Figuring out the right answers is tough because 64% of Americans say they don't know who to trust when it comes to learning about the economy. And that number is relatively bipartisan.
- Even if the information on the economy is reported correctly, 62% of Americans think the economy is worse than the media makes it out to be.
"Americans have perception gaps around the economy," Jacklyn Cooney, a research manager at Harris, tells Axios.
That's a polite way of saying many Americans are doing a poor job of keeping up with economic news. It's time we start doing better. It's hard to cast a meaningful vote without having accurate information upon which to base it.