Dem 51
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GOP 49
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Why Do People Say the Economy Sucks?

It is a good time to be a worker and bad time to be a consumer. However, many people are both. They say that everything is terrible. But people's perceptions of the economy are often wrong. This is the problem Joe Biden has to deal with. That's what the football ads are all about.

To start with, unemployment is at a near-historic low. Anyone who wants a job can find one fairly easily, even young people and people with no experience. "Help wanted" signs are everywhere. People with a job are confident that they won't be laid off and know that even if they are, they can find a new one easily. So why the gloom?

One reason is inflation. It shot up in 2021-22, but is way down now. Of course, prices have not gone back to their 2019 levels. On the other hand, wages are way up but people remember what eggs used to cost and what they cost now. They don't remember what they were earning in 2019 back when eggs were "cheap." In recent months, wage gains have been more than inflation, but only government labor statisticians know this. It is a closely held state secret.

Businesses don't like the full employment we have now. They have to compete hard for workers and pay them more. Turnover is also higher since workers can often find another job that pays more. Businesspeople tend to complain loudly about the economy and that affects the public perception.

Full employment also affects consumers. Since companies are having trouble finding staff, stores, restaurants, hotels, banks, and other companies are often operating with fewer employees than they want. That leads to slower and worse service and, sometimes, shorter hours. People notice that but don't understand it is a consequence of full employment and not enough workers to fill the available open positions.

Another issue is interest rates. They are way up as a result of the Fed's program for trying to curb inflation. This affects different people differently. Borrowers don't like it. Savers and seniors living on the interest from their bank accounts do. But there are more borrowers than savers, so high interest rates are not popular.

Partisanship plays a huge role in perception of the economy. When a Democrat is president, virtually all Republicans say the economy is terrible, and say it loudly. When a Republican is president, the reverse happens. The media tend to amplify this noise. It's easier to write stories about workers on strike or CEOs grumbling than about "everything is running smoothly," so reporters tend to seek out trouble spots and publicize them.

The current economy has been especially good to low-wage workers. The shortage of available workers has forced companies to pay more to attract and keep them, so the gap between low-wage and middle-wage workers has decreased substantially. Some middle-wage workers don't like this new development so much.

People's actual spending habits belie what they are telling pollsters about the economy. When people are actually pessimistic about the future, they spend less and save more. Data show that people are spending like crazy, not saving. This says that they are largely optimistic in their outlook about the future, despite what they say. (V)

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