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A help-wanted sign at a restaurant in Mount Prospect, Ill., on Dec. 4, 2023. (AP) A help-wanted sign at a restaurant in Mount Prospect, Ill., on Dec. 4, 2023. (AP)

A help-wanted sign at a restaurant in Mount Prospect, Ill., on Dec. 4, 2023. (AP)

Louis Jacobson
By Louis Jacobson March 6, 2024

Talk about a disconnect.

Unemployment is near record lows. Job creation is robust. The economy is growing, driven by healthy consumer spending. And the stock market has hit record highs.

Yet surveys show that Americans are disgusted with the economy. And President Joe Biden, seeking reelection in November, is feeling the public’s agitation. 

Biden has struggled to convince voters that the economy is strong — or that he deserves any credit for his economic stewardship.

In a February Marquette Law School poll, 35% of national respondents said the economy was "excellent" or "good," compared with 65% who said it was "not so good" or "poor."

A February Monmouth University poll primed respondents with several metrics showing a strong economy — including "lower unemployment, higher productivity and a high Dow Jones average" — before asking whether their family had benefited. 

But sentiments stayed dour. Only 33% told the pollster their family had benefited either "a great deal" or "some" from the "economic upturn," compared with 64% who said they had benefited "not much" or "not at all."

Voters are giving Donald Trump — who’s seeking to return to the White House — more love on the economy than they’re giving Biden. In a late February-early March CBS News poll, almost two-thirds of respondents nationally said the economy was good under Trump, while 39% said the same of today’s economy under Biden.

Why are Americans so glum about an economy that is strong on the numbers?

It seems inflation and high interest rates are blotting out every other metric for the average American, combined with self-reinforcing doom loops of media coverage and partisan biases. 

Americans have different statistics top of mind

The biggest albatross for Biden’s economy is inflation. 

Year-over-year inflation peaked around 9% — a four-decade high — in summer 2022. It has fallen to about 3% in recent months, closer to the Federal Reserve’s 2% target. Economists generally attribute the peak inflation to supply chain problems that emerged during the pandemic; this was exacerbated by fiscal stimulus legislation signed by Biden shortly after he took office.

Americans "want these prices to be back where they were before the pandemic," Federal Reserve Board member Lisa Cook said in a November speech at Duke University.

The problem is that, by nature, inflation doesn’t act that way. When inflation slows, as it has for a year and a half, it doesn’t produce lower prices. Rather, prices climb more slowly, allowing wage increases to catch up.

Americans have noticed that food prices are up 20% on Biden’s watch.

"Most people shop for groceries every week, making those prices particularly salient," A. Lee Hannah, a Wright State University political scientist who has written about consumers’ views of the economy, told PolitiFact.

Another weekly ritual is a trip to the gas station. Although gasoline prices have fallen substantially from their summer 2022 peak, they remain about 30% higher than when Biden took office.

Two long-running consumer confidence measures illustrate inflation’s unique impact on public sentiment about the economy.

The University of Michigan produces one survey. Although this monthly metric has rebounded over the past year, the rating under Biden remains lower than it was for four of the past five presidents at the same point in their tenures.

For more than two years through December 2023, the survey’s consumer sentiment score was lower than it was at April 2020 — a startling finding, given that in April 2020 the unemployment rate was 13.2% and Americans were facing the uncertainty of a once-a-century pandemic.

The Conference Board, a business membership and research organization, conducts another monthly consumer confidence survey. By this gauge, consumer sentiment is now higher than it was under three of the previous four presidents at this point in their tenures. 

There’s a straightforward explanation: The surveys ask different questions

The University of Michigan survey is more sensitive to inflation, and the Conference Board’s measure tends to reflect labor market conditions, such as today’s low unemployment rate and rapid job creation.

The government’s primary cure for inflation is raising interest rates, which is causing a different kind of consumer heartburn.

Interest rate hikes by the Federal Reserve — which have largely succeeded in reducing inflation — have also sent mortgage and credit card rates higher, squeezing borrowers and homebuyers, especially those who are entering the housing market for the first time.

A significant number of Americans, Hannah said, "are gainfully employed, have seen their wages rise, and are enjoying cheaper gas — but they remain pessimistic because some of these larger purchases like homes or cars seem unattainable right now."

Not everyone experiences the economy the same way

Compounding Biden’s challenge is that, adjusted for inflation, wages haven’t quite caught up to price growth. 

Given current trends, inflation-adjusted wages should soon arrive back at the purchasing power they had when Biden was inaugurated. Still, this means that Americans have felt like they’ve been falling behind on prices for three full years under Biden.

Low-income Americans feel this pain the most, because a higher percentage of their income is taken up by food, gasoline and other necessities with prices that inflation has affected most.

The resumption of federal student loan payments in late 2023 might also be contributing to some Americans feeling less well-off, economists said.

"Consumers' income growth has finally started to offset inflation, but while the trend is good, there's still a bit of ground to cover for people's purchasing power to get back its longer-run trend," said Sasha Indarte, an assistant professor of finance at the University of Pennsylvania’s Wharton School.

The media has been increasingly negative about the economy

Many Americans pay little attention to broad economic statistics, which leads to misconceptions, economists said. A December Bankrate survey found that about six of 10 respondents said the U.S. economy was in a recession — when a recession was never declared. A Financial Times survey found that 90% of respondents said prices have risen faster than wages over the past year, even though the opposite is true.

If news organizations are trying to correct these misconceptions, the message isn’t getting through, said Aaron Sojourner, a senior researcher at the W. E. Upjohn Institute for Employment Research.

In a January analysis, Sojourner and a co-author used a San Francisco Federal Reserve database that rates whether economic news coverage is tonally positive or negative. The analysis found that since 2018, economic news coverage has grown increasingly negative — and "increasingly unmoored from economic fundamentals." 

Sojourner has found a widening gap during that period between people who believed their local economy was "good" or "excellent" and people who felt similarly about the national economy.

"Because people rely more on news to understand the national economy than their local economy or their personal finances, this provides some evidence that negative news sentiment plays a role," Sojourner told PolitiFact.

One example of a media mismatch is that despite many recent stories about how young people have given up on ever owning a home, the homeownership rate for young people is higher today than it was in 2016, said Dean Baker, co-founder of the liberal Center for Economic and Policy Research.

Baker said recent news coverage also misses other economic positives.

"I have seen virtually zero mention of the 17 million additional people who are able to work from home, saving thousands of dollars in commuting-related expenses and hundreds of hours spent commuting," Baker added. "Almost no one is familiar with the surveys of workplace satisfaction, which report record highs."

Partisanship is increasingly shaping Americans’ assessments of the economy

Responses to surveys have become increasingly driven by partisanship

In the February Monmouth poll, 83% of Republicans said they had benefited "not much" or "not at all" from the economy, compared with 38% of Democrats who said they hadn’t benefited much. Independents were almost as negative as Republicans, with 72% saying they hadn’t benefited much.

These sentiments can flip without any change in economic fundamentals — only a change in political party. 

Republican sentiment surged and Democratic sentiment "plunged between November 2016 and January 2017, and vice versa in 2020-2021" — when the party controlling the White House switched parties, Joanne W. Hsu, consumer surveys director at the University of Michigan, wrote of her survey results.  

Beyond dollars-and-cents metrics, the world is awash in strife, with wars in the Middle East and Ukraine, and the U.S. is riven by culture-war controversies, all juiced by an unceasing flow of charged rhetoric on social media. It would be a surprise if none of this seeped into perceptions of the economy.

Then again, Yahoo Finance senior columnist Rick Newman wrote in March, "if ‘poor’ is the American public's baseline understanding of the economy when things are pretty good, we’re going to need some new terminology to describe what’s going to happen when another recession strikes, which is inevitable."

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Our Sources

PolitiFact, "The Biden-versus-Trump economy: Who did better on inflation, jobs, gasoline prices and more?" March 4, 2024

Federal Reserve Board of St. Louis, "University of Michigan: Consumer Sentiment," accessed March 6, 2024

Conference Board, "Survey: US Job Satisfaction Hits All-Time High’," May 11, 2023

USA Facts, "Homeownership is rebounding, particularly among younger adults," January 29, 2024

San Francisco Federal Reserve, Daily News Sentiment database, accessed March 6, 2024

Joanne Hsu, "Partisan Perceptions and Expectations," Feb. 23, 2024

Paul M. Kellstedt, Suzanna Linn and A. Lee Hannah, "The Usefulness of Consumer Sentiment: Assessing Construct and Measurement" (Public Opinion Quarterly), 2015

Atif Mian, Amir Sufi and Nasim Khoshkhou, "Partisan Bias, Economic Expectations, and Household Spending" (The Review of Economics and Statistics) May 9 2023

Ben Harris and Aaron Sojourner, "Why are Americans so displeased with the economy?" (Brookings Institution paper), Jan. 5, 2024

Greg Ip, "The Economy Is Great. Why Are Americans in Such a Rotten Mood?" (Wall Street Journal column), Nov. 1, 2023 

Rick Newman, "Pollsters are pranking us, right?" (Yahoo! News columnist), March 4, 2024

Rick Newman, "Why Americans are more bummed out than ever" (Yahoo Finance column), Dec. 6, 2023

Yahoo Finance, "Why Are Americans Unhappy About the ‘Thriving’ Economy? — 5 Reasons Behind the Economic Gloom," Jan. 19, 2024

Catherine Rampell, "Americans are happier about the economy. Why are they crediting Trump?" (Washington Post column), March 5, 2024

The Associated Press, "Why Americans feel gloomy about the economy despite falling inflation and low unemployment," Nov. 19, 2023

Quinnipiac University poll, February 2024

Monmouth University poll, February 2024

Marquette Law School poll, February 2024

CBS News poll, February 2024

CNN, "Americans say the economy stinks. But they’re spending like it’s great," Nov. 8, 2023

Bankrate, "The ‘Silent Recession:’ Economists say the economy is strong, but most Americans feel like they’re living in a downturn," Dec. 6, 2023

CBS News, "Here's why Americans are so unhappy with the economy, in 3 charts," Jan. 12, 2024

Wall Street Journal, "Why Americans Are So Down on a Strong Economy," Feb. 9, 2024

Christian Science Monitor, "Americans feel better on economy. It’s taken a while," Feb. 14, 2024

PolitiFact, "Do Biden’s policies get the credit for the decline in inflation, as Kamala Harris said?" Nov. 3, 2023

PolitiFact, "Donald Trump exaggerates food inflation under Joe Biden; prices are not 40% to 60% higher," Feb. 13, 2024

PolitiFact, "How strong is consumer confidence under Joe Biden?" Aug. 3, 2023

Email interview with Dean Baker, co-founder of the Center for Economic and Policy Research, Feb. 27, 2024

Email interview with Douglas Holtz-Eakin, president of the American Action Forum, Feb. 27, 2024

Email interview with Gary Burtless, senior fellow with the Brookings Institution, Feb. 27, 2024

Email interview with Rick Newman, senior columnist for Yahoo! News, March 5, 2024

Email interview with A. Lee Hannah, Wright State University political scientist, March 5, 2024

Email interview with Aaron Sojourner, senior researcher at the W. E. Upjohn Institute for Employment Research, March 5, 2024

Email interview with Sasha Indarte, assistant professor of finance at the University of Pennsylvania’s Wharton School, March 6, 2024

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