Some Americans live in a parallel economy where everything is terrible
Is the economy booming or busting?
Depends on whom you ask.
The official data is buoyant — economic growth is solid, the job market is strong, and stocks keep hitting record highs.
Yet many Americans think the economy stinks.
The latest gloomy indicator is a Guardian-Harris survey in which 55% of respondents said they think the economy is shrinking and 56% think we’re in the midst of a recession.
Economic output, adjusted for inflation, grew by a solid 3% during the most recent 12-month period. The unemployment rate is 3.9%. And the US economy created over 3.5 million jobs in 2023.
You basically can’t have a recession when the economy is growing and employers keep hiring at this rate. But this Harris poll isn’t a one-off.
A leading measure of small business sentiment is near recessionary levels. So are some consumer confidence surveys. President Biden’s approval rating is in the tank, too, indicating many Americans associate the poor economy they think we have with the job Biden has done as president.
The Guardian-Harris survey also found that 49% of respondents think the S&P 500 index is down for the year. In reality, stocks have been ripping: The S&P 500 is up 13% this year on top of a 24% gain last year.
Something seems off with the Guardian-Harris finding that half of Americans think the stock market is in decline. In a different survey, Gallup found that 62% of Americans own stocks, mostly through retirement and investing accounts. If that’s true, wouldn’t most or all of those people know their portfolios are gaining value?
The Guardian-Harris poll didn’t specify how many respondents own stocks, but these two surveys seem to conflict. People know how much money they have, and stock market investors are either underrepresented in the Harris poll or overrepresented in Gallup’s.
Statistical anomalies probably explain part of the reason why polls show people to be remarkably dour about an economy doing pretty well, but it would be a mistake to think this is just a measurement problem. Or worse, to think many people are just too dumb to know how good they have it.
This is perhaps Biden’s top problem as he seeks a second term in office: convincing Americans that the economy is working for them without talking down or sounding dismissive.
