As we approach the midterm elections, most of the political coverage I see frames the contest as a struggle between Republicans taking advantage of a bad economy and Democrats trying to scare voters over the Republican Party’s regressive social agenda.
The voters, in fact, perceive a Bad economy.
But perceptions do not necessarily correspond to reality.
Notably, although political reports generally assume the economy is in poor shape, the data tell a different story.
Yes, we have worryingly high inflation.
But other indicators paint a much more favorable picture.
If inflation can be reduced without a major recessionwhich seems a concrete possibility, economic policy in the face of the pandemic will be considered by future historians as a story of remarkable success.
In assessing the state of the economy,
what period should we use to compare?
I noticed earlier that Republicans like to compare the current economy with a fictional version of January 2021, one where gas was $ 2 a gallon, but less pleasant realities like skyrocketing deaths from COVID-19 and deeply depressed occupation, which are airbrushed by the image.
A much better comparison is with February 2020, just before the pandemic hit in full force.
So how does the current economy compare to the eve of the pandemic?
First, we had it Recovery more or less complete in work and production.
The unemployment rate, at 3.5%, is back to where it was before the virus hit.
So is the percentage of working-age adults in employment.
Gross domestic product is close to what the Congressional Budget Office predicted before the pandemic.
This good news is not to be taken for granted.
In the first months of the pandemic, there were many predictions that it would cause “scars”, persistent damage to jobs and growth.
The slow recovery from the 2007-09 recession was still fresh in economists’ memory.
So the speed with which we have returned to full employment is remarkable, so much so that we can call it the Great Recovery.
However, while workers can get a job again,
Hasn’t your purchasing power been heavily influenced by inflation?
The answer may surprise you.
In September, consumer prices were at 15% more than on the eve of the pandemic.
However, average wages increased by 14%, almost matching inflation.
The wages of non-supervisory workers, who make up over 80% of the workforce, increased by 16%.
Therefore, there has not been a great impact on real wages in general, although gasoline and food, which are not very much influenced by politics, but are very important for people’s lives, have become less convenient.
Mandatory note:
There are other measures of both prices and wages, and if you pick and choose, you can make the story look a little worse or a little better.
More importantly, some Americans are particularly exposed to prices that have risen dramatically.
On average, however, there has not been a great impact on the standard of living.
But won’t reducing inflation require a bad recession?
Perhaps, and widespread recession forecasts could influence public perception.
But they are predictions, not established facts, and many economists disagree with these predictions.
I will not repeat that ongoing debate here, except to say that there are plausible arguments that disinflation will be much easier this time than it was after the 1970s.
However, despite what I said, the public did economic perceptions very negative.
Doesn’t that tell us the economy is really in bad shape?
No it does not.
People know how well you are doing.
However, their views on the national economy can differ greatly from yours. personal experience.
A Federal Reserve survey found that in 2021 there was a large gap between the growing number of people with a positive view of their finances and the declining number with a positive view of the economy;
perceptions about the local economy, which people can see with their own eyes, were somewhere in between.
I suspect that when we have results for 2022, they will look similar.
To be fair, the pick-up in inflation after decades of slowness, combined with fears of a potential recession, has unnerved many Americans.
The point, however, is not that the public is wrong to worry; is that negative public opinion on the economy they are not refuted the claim that the economy is doing well in many, if not all, dimensions.
Now, I’m not suggesting that Democrats spend their final days of campaigning telling voters that the economy is really good.
It is not.
But Democrats shouldn’t even admit that the economy as a whole is in bad shape.
Under his command, very good things have happened, especially an employment recovery that has exceeded almost everyone’s expectations.
And they have every right to point out that while Republicans can denounce inflation, Republicans they have no plan to reduce it.
c.2022 The New York Times Company
Source: Clarin
