Many Americans are gloomy about the economy, despite some data saying it is improving.
The Economist even took this discussion to TikTok. When its US editor John Prideaux examined inflation, wage and employment numbers, he concluded that the US has “an objectively pretty good economy”.
Is Prideaux wrong or the American electorate? And if the US economy is bouncing back, why is President Joe Biden not seeing an economic bounce in the polls?
Political commentator Robert Reich recently explained: “The economy is getting better overall – but overall has become a less useful gauge of wellbeing.” Reich suggested that the usual way the economy is measured can obscure more diverging or individualised economic trends, such as wealth inequality. That is, the macroeconomic indicators are right, but that only tells us part of the story.
Pundits frequently turn to the same narrow measures to define the very large, complex concept of the economy. Widely quoted measurements such as GDP are often treated as synonymous with the economy itself. Importantly though, when polling firms asks Americans about the issues important to their vote, it is the economy and not GDP that is given as an option.
Voters think of the economy in very different ways. Researchers observe that the public often perceives the economy through the lens of their personal experience.
As part of my research, I carried out 17 in-depth interviews and reviewed social media comments, to find out what Americans mean when they say “the economy”. Answers included topics as varied as religion, marriage and nature.
This might seem incorrect, but economics researchers already know that these are all elements of the economy. Religion can shape economic behaviour. Marriage partners combine savings to make larger purchases. Finally, nature provides physical resources necessary for production and consumption.
Just one interviewee mentioned GDP, but only to say that GDP is not the economy. He recommended looking at “measures of wellbeing”.
This is consistent with research seeking to better represent these other aspects of the economy important to people. It is from these more inclusive studies that we might understand American voters’ pessimism.
The Academy of Arts and Sciences’ Commission on Reimagining Our Economy released a report in November 2023, recommending additional measures to evaluate the economy around “wellbeing”: security, opportunity, mobility and democracy.
The report includes an interview with Kailin, a café worker and single mother in Kentucky. She worries about losing Supplementary Nutritional Assistance Program benefits or health insurance if she is given a pay rise. She explains that going a penny over the cut off point immediately disqualifies her from assistance, even when that is not enough to cover household expenses.
UK research organisations have experimented with citizens’ assemblies to bridge the gap between expert and everyday perceptions of the economy. During these discussions, participants use personal stories to explain the economy. As one citizen put it: “The huge thing that’s hanging in my head is corporate profits […], then the shareholders are getting nice dividends on the back of those profits, meanwhile, John’s father is freezing.”
The assemblies have produced an economic charter, focusing on fairness, innovation for social good, sustainability and transparency.
In the New York Times, Chrystal Audet, who lives in her car, tells interviewers, “It’s the irony of working and making a nice income and still not being able to afford housing.” The cost of renting a home is the worst on record, triggering record levels of housing insecurity. Chrystal is one of the 40-60% of homeless Americans who is employed but still can’t afford housing.
Dissatisfaction with the economy may also be linked to political dissatisfaction. US economist Paul Krugman recently noted that pessimism about the economy is stronger among Republicans than Democrats. Similarly, Black Americans viewed the economy more negatively during Trump’s administration.
A Washington Post-Ipsos poll interviewed Black Americans to investigate this trend. One interviewee, Francine, explained: “If I’m in a room with white women, I know that 50 percent of them voted for Trump… I look at them and think, ‘How do you see me? What is my humanity to you?’” Francine details how racism inhibits Black Americans’ economic opportunities, a well documented feature of the US economy.
These four examples – Kailin, John, Chrystal and Francine – show what might be described as subjective understandings of the economy. They are, after all, based on varied personal experience. However, these views are grounded in how they experience the economy.
Undoubtedly some voters feel that Biden deserves more credit for his economic achievements. However, voters are not feeling a positive glow, and for that reason may not trust what the experts, or government, are saying. This comes at a time when public trust in government is at an all-time low.
There is no universal agreement about how the economy is defined, let alone what determines a good or bad economy. However, this mismatch between data and public opinion could be an opportunity. Everyday experiences can help experts better understand where the economy isn’t delivering.
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The conversation
