December 01, 2023
All the normal economic data tell us that people should feel pretty good about the economy right now. Unemployment has been below 4.0 percent for 21 consecutive months for the first time in more than half a century.
Tens of millions of people have left jobs they didn’t like to find better ones. As a result, workplace satisfaction is at the highest level it has been in the nearly forty years the Conference Board has done its survey.
The recent jump in mortgage rates has made it difficult for first-time home buyers, but homeownership rates are still well above pre-pandemic levels overall and for young people, Blacks and Hispanics, and people with below the median income.
The number of workers who can work from home, saving themselves thousands a year in commuting costs and hundreds of hours of time spent commuting, has increased by roughly 11 million.
Fifteen million households have been able to refinance their mortgages and save themselves thousands of dollars a year on interest payments.
And, real wages are above pre-pandemic levels, as wage growth has outpaced inflation. With inflation slowing, this pattern should continue. The biggest wage gains were for those at the bottom of the wage distribution.
All of these factors suggest that people should be feeling pretty good about the economy right now, but polls consistently show that people think the economy is doing terribly. Those of us who point to the data are told that we can’t argue with people’s lived experience, people feel what they feel.
That’s fair enough, except I want to know how people’s lived experience can tell them that their local economy is doing okay, it’s only the national economy that is in the tank?
A recent poll by Bloomberg found that 49 percent of respondents said their local economy is on the right track. Now that’s not great, but pretty damn close to half.
By contrast, only 26 percent said that the national economy was on the right track. This means that 23 percent of the people answering the poll thought things were going well where they lived, but were bad in the rest of the country.
My question then is, how this 23 percent could, based on their lived experience, determine that things were worse where they didn’t live than where they did live?
My working hypothesis is that they are likely reflecting the media’s endless trash-talking of the economy. The problem is not just Fox, which sees its purpose as advancing the Republican agenda, but also CNN, the NYT, the WaPo, and other major news outlets. Stories about inflation and prices not falling (they never do) fill their pages.
Stories about record-low unemployment are few and far between, and pieces on workplace satisfaction, the surge in mortgage refinancing and interest savings, and explosion in work-from-home are virtually none existent.
In my working hypothesis, when people tell us the national economy is bad, they are not reporting on their lived experience, they are repeating what they have heard directly or indirectly from the media. Everyone knows the economy is bad, they don’t want to look stupid so they give what they have been told is the correct answer.
I am open to other explanations for how 23 percent of the people think their local economy is on the right track, but the national economy is not.