A majority of Americans think the U.S. economy is heading in the wrong direction, according to an exclusive poll. newsweekmany are blaming Joe Biden’s economic policies, or Bidenomics, for this.
But experts said: newsweek The U.S. economy is considered to be doing relatively well, especially when compared to most other Western countries. The negative economic outlook held by many Americans is likely related to the fact that the current economic situation is objectively complex and difficult to understand.
“The combination of economic indicators is confusing even to economists who spend all their time looking at these numbers,” said Stephen Weiler, an economics professor at Colorado State University. newsweek. “This is a very unusual combination of financial and global conditions, and the uncertainty is leading to pessimism.”
John Van Reenen, Ronald Coase Professor of Economics at the London School of Economics (LSE) in London and a digital fellow at the Massachusetts Institute of Technology (MIT) Digital Economy Initiative, said the U.S. economy was also affected by the pandemic. They are suffering from a “hangover” from the subsequent rise in inflation.
“Prices are coming down, but the rise is still fresh in people’s minds,” he said. newsweek. “Governments around the world are being punished for their terrible experiences, and I think that’s part of what’s happening in the United States,” Van Leend added. “It’s ironic, because compared to other developed countries, the United States is doing great in terms of growth.”
But many Americans don’t think of it the way Van Reenen does.
Their widespread pessimism is reflected in the results of a poll conducted by Redfield & Wilton Strategies on behalf of: newsweek The survey found that about 50% of Americans believe the U.S. economy is heading in the wrong direction, but only 25% say it’s heading in the right direction.
Americans are also negative about their economic situation. About 42% of respondents said their financial situation worsened last year. Only 26% said it had improved, and 32% said it had remained the same.
About 47% of Americans say they’re worse off financially than they were three years ago, 26% say they’re better off and 27% say they’re about the same. About 45% said their lives are worse now than they were before the pandemic, 28% said they are better, and 27% said they are about the same.
The poll was based on interviews with 1,500 voters across the country.
But despite the malaise shared by millions of Americans, economists maintain that the U.S. economy is “in relatively good shape,” as Weiler put it.
“The fact that the pandemic (an event that would normally have been followed by a massive economic impact) had a soft landing rather than a recession is a tribute to the fact that there was both good monetary and fiscal policy. “At critical times in 2020, 2022 and 2023,” he added.
Here’s how Weiler and Van Reenen described the state of the economy.
Inflation is stubborn but still on the decline
The current inflation rate is significantly lower than it was in summer 2022, when it peaked at over 9%. But the latest data shows the trend remains stubborn. Inflation rose 3.5% in March, higher than expected, exceeding February’s 3.2% rise from a year earlier.
“Inflation hasn’t come down as much as the market expected, that’s true,” Van Reenen said. “And there’s been some revision in terms of rate cut expectations. That’s going to be a bit of a headwind, but if you look at core inflation, it still looks like it’s lower in the last six months compared to before.” he added. did.
Consumers are now paying more for things like gas, car repairs and car insurance, but prices for other goods, including groceries, have remained flat in recent months and rose just 1.2% last year. Ta. In other words, inflation does not appear to be on the path to recovery. That means the Fed remains likely to cut interest rates this year.
“It may not happen as quickly as we thought, but it’s not a dramatic correction,” Van Reenen said of the latest data. “I think the overall picture remains strong.”
Wages are rising, but Americans’ savings are falling.
A strong U.S. labor market has kept the economy strong and allowed consumers to continue spending even as savings began to dwindle after the pandemic.
“Americans say the economy is bad, but they keep spending as if the economy is good,” Weiler said. “Prior to COVID-19, personal savings were around 4% of income, but they have fallen to 3.2% of income in the latest measurements.”
Americans’ eagerness to spend, sometimes beyond their means, despite remaining deeply pessimistic about the state of the U.S. economy has baffled economists, but their one-time attitude towards life (YOLO) can be explained as a response to a shared society. The dramatic experience of the pandemic.
On the other hand, the fact that Americans’ ability to spend has not been completely compromised by the rise in inflation over the past several years is largely due to rising labor markets and wages, which are growing faster than inflation. In the last few months.
U.S. employers added 303,000 jobs in March, up nearly 3 million jobs over the past year. The unemployment rate fell to 3.8% in the same month. Wages rose 0.3% from the previous month and 4.1% from the same month last year. Biden described the report as “a milestone in America’s recovery.”
The pace of hiring slowed slightly in April, with employers adding 175,000 jobs and the unemployment rate rising to 3.9%. But overall, the numbers remain positive, even though the job market is showing signs of slowing.
“Relative to inflation, wages and salaries are actually holding up relatively well,” Weiler said. If Americans don’t see these as positive indicators for the overall U.S. economy, it’s because they believe they earned their wages and salaries when the country is responsible for inflation. ‘ said Weiler.
“Whoever is running the country is letting the people down by increasing inflation. They don’t realize that the two are actually connected,” he added.
hottest issue of the year
Approximately 59 percent of respondents to the Redfield & Wilton strategy/newsweek Polls show that the most important issue in this country today is the economy. This is up from 56 percent of the same response the previous month. So you can see this being a very big issue in his November election.
Whether the current state of the U.S. economy favors Biden or his rival Donald Trump depends less on what’s actually going on and more on voters’ opinions about it. Probability is high.
Approximately 48 percent of respondents to the poll newsweek 27% think Biden’s economic policy, Bidenomics, is actually moving the U.S. economy in the wrong direction, even though 27% think it is helping move the U.S. economy in the right direction. .
Economists disagree. “I actually think the Biden administration has done an important job in getting us out of what could have been a pretty severe COVID-19 recession,” Weiler said. “The stimulation they feel is [the Biden administration] What he passed soon after taking office was actually important in keeping us out of a recession. ”
What Americans say in response to questions and surveys is “not what they’re actually experiencing,” Van Reenen said, “and the reason for that is simply because of the intense crisis going on in the United States.” I believe it is polarized.”
“If you’re a Republican, even if you’re doing well, you say you’re not doing well because you don’t like President Biden,” the Massachusetts Institute of Technology economist said. He said there was evidence that the opposite was true. Trump was in power. ”
Weiler said that while people’s perceptions of the economy will be very important in November, “Personally, I don’t think the Biden administration is taking much responsibility for the economy anymore at this point.”
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Newsweek is committed to challenging conventional wisdom, finding common ground and finding connections.