Economists and the administration seem perplexed. If the economy is so good, why are people feeling so bad?
Leaving the war to the side for the moment, resolving this paradox requires understanding that economists, the White House and voters all consult different measurements in shaping their conclusions. The electorate’s leading economic indicators are not the same as those employed by the White House or the economists.
The White House website screams about 31 months of job gains, proclaiming that unemployment is lower than the average for earlier decades. Last week, the president cheered himself on, noting that gross domestic product “grew at an impressive 4.8 percent annual rate in the first quarter of this year. That’s the fastest rate since 2003. This rapid growth is another sign that our economy is on a fast track.”
The basic facts have not gone unnoticed by voters. Gallup reports the number of people who think this is a good time to find a job has nearly doubled since its recent low point in 2003. Just 10 percent think it is likely that they will lose their job in the next year. When unemployment is high, voters recognize the problem and hold officeholders accountable. However, while the mere availability of jobs is necessary evidence of a good economy, it is no longer sufficient.
Economists look at a different set of economic indicators — factors like vendor performance, stock prices, manufacturers’ new orders for consumer goods, interest-rate spread, manufacturers’ new orders for non-defense capital goods and real money supply. Those indicators are also looking up, with the stock market near a six-year high.
Those measurements, though, like GDP, are abstractions. People cannot eat GDP, pay for prescription drugs with the interest-rate spread, clothe their families with orders for capital goods or pay college tuition with the money supply (except of course from their personal money supply).
Everyday circumstances shape voters’ economic outlook. Today, the public’s leading economic indicators are the cost of gasoline, the cost of healthcare and the number of jobs exported overseas.
In the real world, voters feel squeezed between prices that are rising and incomes that are stagnant. There is an income side and an outgo side to that middle-class squeeze equation. Money is taken out of people’s wallets to pay for a host of necessities, with healthcare and gasoline costs the preeminent symbols of the outgo side of that equation. Voters also worry that less and less money is coming into their wallets as they watch high-paying jobs shipped overseas.
As a result, while the economic entrails read by the president and the professionals indicate good times, voters are feeling bad. At the end of 2004, people were evenly divided about the economy’s prospects. Today, by a 35-point margin, Americans see the economy getting worse rather than better. More Americans are worried about not having enough money to pay their bills than at any time in the past five years. The same is true with respect to concern about inability to pay for healthcare. Soaring gas prices have inflicted hardships on 70 percent of the country.
The Dow and the money supply may define the economy for the experts, but for those who live in the economy the criteria are different. They want an income sufficient to afford the middle-class basics — gas for their commute to work, healthcare for their families, college or vocational training for the kids and a secure retirement. Republicans will not get credit for raising the Dow as long as they are squeezing the middle class.
Mellman is president of The Mellman Group and has worked for Democratic candidates and causes since 1982, including Sen. John KerryJohn KerryOvernight Defense: Obama defends Manning commutation after backlash | Mattis clears Senate panel Kerry: Trump can’t instantly undo Obama actions ‘All or nothing’ leaves us nothing MORE (D-Mass.) in 2004.