As we head towards the 2024 election, President Joe Biden faces a persistent conundrum. Although significant data points show the economy is healthy, certain pressures have made Americans believe it isn’t.
In fact, according to a Harris poll conducted for the Guardian, 56% of Americans “wrongly” believe the U.S. is in a recession and 55% of Americans believe the economy is shrinking. In reality, the last recession to hit the country was during the COVID-19 pandemic in 2020 and gross domestic product data shows that the economy is growing.
“Unemployment has also hit historic lows, wages have been going up and consumer spending has been strong,” said the Guardian.
At the same time, inflation has been up and the Federal Reserve Bank has been raising interest rates. Despite all of the positive economic markers, these two factors have made dollars stretch less and made it more expensive for consumers to borrow money. These factors are also apparent when Americans are actually buying things and when they’re paying credit card bills – times when the “economy” becomes personal to them.
“What Americans are saying in this data is: ‘Economists may say things are getting better, but we’re not feeling it where I live,’” said John Gerzema, CEO of the Harris Poll. “Unwinding four years of uncertainty takes time. Leaders have to understand this and bring the public along.”
Pessimism about the economy extends to American’s views of the stock market and unemployment. Nearly half of the participants in the Guardian/Harris poll said they believe the S&P 500 stock market index is down for the year and that that unemployment is at a 50-year high. Both are false – the stock market was up 24% last year and is up more than 12% this year, whereas unemployment is at a 50-year low.
Another misconception revealed by the poll is related to inflation – 72% said they think inflation is increasing. Inflation did rise month-over month by 0.3% in April and by 3.4% in the 12-month period ending that month, according to the U.S. Bureau of Labor Statistics. However, it did not increase as much as the 12-month period ending in March. It’s also down considerably from a record peak of 9.1% in June 2022.
In March, Audacy reported that “Americans seem to have been spending their way out of the threat,” of a recession.
This month, Federal Reserve Bank Governor Christopher J. Waller even said: “More recent data on the economy indicate that restrictive monetary policy is helping to cool off aggregate demand and the inflation data for April suggests that progress toward 2% has likely resumed. Central bankers should never say never, but the data suggests that inflation isn’t accelerating, and I believe that further increases in the policy rate are probably unnecessary.”
Americans also blame the Biden administration for the perceived weakness of the economy and for the recession that we are not actually in. Close to three fifths of those polled (58%) said the economy is worsening due to mismanagement from the presidential administration.
That goes for Republicans and a significant number of Democrats. According to the Guardian/Harris poll, 49% of Biden’s own party believe the country is in a recession. Even more independents (53%) and Republicans (67%) believe we are.
A majority of Democrats (61%) also believe that inflation is increasing, as well as 74% of independents and 80% of Republicans.
“Some have called the phenomenon a ‘vibecession,’ a term first coined by the economics writer Kyla Scanlon to describe the widespread pessimism about the economy that defies statistics that show the economy is actually doing OK,” said the Guardian.
Per a recent report from the Fed, “overall financial well-being was nearly unchanged from 2022,” and that last year “72% of adults reported either doing okay or living comfortably financially, similar to the 73% seen in 2022 but down 6 percentage points from the recent high of 78% in 2021.”
That report also found that Americans were feeling pressure due to increased prices.
Prices are still higher than they were in the pre-pandemic era, and 70% of Americans said their biggest concern was cost of living. Another 68% were concerned about inflation. One positive for Biden revealed by the latest poll is that more people – even Republicans – are optimistic about the lasting impact of his “Bidenomics” plan.
“We’ve already turned it around,” Biden said of the economy in an interview this month with CNN’s Erin Burnett. “The polling data has been wrong all along.”
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