Americans Want a Change in the Economic Climate
It is easy to fall into an apocalyptic mood when breathing in smokey air beneath the ochre sun that has hovered above the northeast U.S. this week. The mind races toward metaphors of impending misery even though we know that it is not a malevolent deity but wildfires in Canada that has sent us this affliction.
“Red sky at night, sailors delight. Red sky in morning, sailors take warning,” the old saying goes.
The American people have been seeing a red sky above the economy for quite some time. The latest results from the Economist/YouGov poll demonstrate that despite unemployment staying below four percent since January of last year, Americans are deeply unhappy about the economy.
Let’s start with the most general question: How would you describe the state of the economy? Just four percent rate the economy as excellent. We’ll assume that a substantial number of those folks work directly for the Biden administration or in one of its subsidiary branches in the green energy sector. Seventeen percent say the economy is “good,” bringing the overall positive assessment to just 22 percent.
On the other side of the ledger, we have 32 percent who say the economy is only “fair.” A plurality of 42 percent say the economy is “poor.” That brings the negative assessment share up to 74 percent.
The demographics tell an interesting story. By a large margin, the age group that is most likely to say the economy is poor or fair are those between the ages of 48 and 64. For this group, 82 percent have a negative view of the economy. Next up are older Americans, 75 percent of whom take negative views. Things are not really that much better with younger adults, however. Sixty-nine percent between the ages of 18 to 29 and 68 percent of Americans between the ages 30 to 47 score the economy as fair or poor.
There is a partisan and ideological gap in views of the economy, with 88 percent of conservatives holding negative views and just 64 percent of liberals. Self-described moderates fall in between, with 69 percent holding negative views. For party affiliation, this breaks down as 86 percent of Republicans on the negative side, 79 percent of independents, and 59 percent of Democrats. Ninety-two percent of Trump voters say the economy stinks, while 58 percent of Biden voters do.
There are gaps in the views between racial and ethnic groups. Seventy-seven percent of whites say the economy is fair or poor, as do 71 percent of Hispanics. Among blacks, the negative assessment share falls—but only to 61 percent.
And, by the way, women are more likely than men to hold a negative view of the economy, at 77 percent to 72 percent.
The most interesting aspect of those numbers, however, is not the divide but the unity. Large majorities across the ideological spectrum, across parties, across racial and ethnic backgrounds, and across voting histories are in agreement that the economy is not doing well.
…But They See Things Getting Worse
The same poll tells us that 53 percent of Americans believe the economy is getting worse. Just 16 percent think the economy is on the mend.
There’s a huge gap between men and women on this measure. Fifty-six percent of women think economic trends point to a worsening economy, versus 48 percent of men.
Whites and Hispanics are equally pessimistic, with 55 percent saying the economy is deteriorating. Among blacks, just 41 percent say the economy is getting worse, while 22 percent say it is getting better. Among whites, the optimistic view scores just 16 percent support. Among Hispanics, a measly 11 percent support.
One takeaway: if Hispanic voters are motivated by the economy next year, Biden will face a tougher reelection fight than his advisers probably anticipate.
It’s All About Inflation
There are plenty of trouble spots in our economy, but it is clear that inflation is driving this negativity. The Economist/YouGov poll indicates this through a number of vectors. When asked which is the more important problem facing the country right now, 53 percent say inflation and just six percent say unemployment. Another 36 percent say both are equally a problem.
The poll also asks what the best indicator of the economy is. Fifty-four percent of Americans say it is the prices they pay. Sixteen percent say jobs, 11 percent say personal finances, and six percent say the stock market. While the numbers vary, prices are the top issue for every age group, every ethnic group, every age group, and across the political and ideological spectrum.
When asked to rate issues as very important, somewhat important, not very important, or unimportant, 73 percent say inflation is very important and another 22 percent say it is somewhat important, for a combined 95 percent. The issue of “jobs and the economy” scores at 69 percent very important and 27 percent somewhat important, combining to 96 percent. But because we know Americans are not that concerned about jobs, this figure is probably also a proxy for inflation’s effect on the economy.
When asked to choose which issue is the most important, seventeen percent say inflation. The next highest scoring issues are health care and the economy at 12 percent. Is anyone paying attention?
Our politics and policies have not yet adjusted to the public’s concerns. Politicians on both sides of the aisle still talk as if “job creation” were the economic challenge of the day. Biden’s White House is constantly bragging about how many jobs were created during his presidency.
They are like the proverbial generals fighting the last war, battling against the low employment recovery of the last decade instead of the high employment sluggishness of this decade. We suspect that the candidate who can most quickly adjust his views to accord with our age of inflation and low productivity—and formulates policies to overcome these problems—will find favor with the public that sees price stability as our biggest challenge.