By Robert Reich
We learned last Thursday that the U.S. economy grew at an annualized 2 percent rate in the first quarter of this year. That’s well above economists’ expectations of around 1.4 percent.
But if you didn’t get this news, you’re not alone. Good economic news doesn’t make it through the negative sludge of Fox News or Newsmax. It almost doesn’t get through the mainstream media, either.
There’s more good news on the economy. In the four years of Donald Trump’s administration, total spending on manufacturing facilities grew by 5 percent. During the first two years of Biden’s administration, manufacturing investment more than doubled. And about 800,000 manufacturing jobs were created.
These remarkable results are the outcome of Biden policies — the Inflation Reduction Act and its green technology provisions, the infrastructure bill, and the CHIPS Act.
What about inflation? Biden’s stimulative spending did boost inflation. But the news that’s not getting through to most Americans is that inflation is dropping. It has declined significantly from its mid-2022 highs above 9 percent. Consumer prices are now rising by about 4.9 percent annually — still a problem, but not nearly the problem it was. Inflation in the United States is now well under the levels in European nations that made no comparable efforts to stimulate their own economies.
I continue to believe that much of the remaining inflation is due to the outsized profit margins that many major businesses have seized for themselves. Even the IMF recently found this. I wish Biden would make an issue of those profit margins. They’re enriching those at the top while imposing a big penalty on everyone else.
And wages? For a while, real (adjusted for inflation) wages really were falling, and many economists were worried about rapidly rising unit labor costs. But now that inflation is subsiding, unit labor costs are moving in the opposite direction, and real wages are picking up again.
So why do so many Americans continue to think the economy is awful? According to the Gallup economic confidence index, Americans haven’t felt this bad about the economy since the global financial crisis in 2008 and 2009. In an NBC News survey conducted a few weeks ago, at least 74 percent of Americans said the country is on the wrong track. The University of Michigan’s Consumer Sentiment Index is also pessimistic.
Given all this, it’s not surprising that Joe Biden’s approval numbers have been stuck at around 43 percent. That’s bad news for an incumbent president running for reelection. History shows that presidents tend to lose reelection bids when about 70 percent of Americans think the country is on the wrong track. They tend to win when fewer than half of Americans think that.
So the obvious question is, why are Americans are feeling so bad about an economy that’s relatively good?
One reason, I think, is a general sense of dread — centering on Trump, DeSantis, and Republican lawmakers in Congress — that seems to affect everything else. (I don’t know about you, but I sometimes have difficulty getting to sleep, worried about the rise of authoritarian fascism in America.) A recent study found that headlines have grown starkly more negative, conveying anger and fear.
Then, too, there’s a kind of national pandemic-related PTSD from which many of us are still suffering.
But I think the deeper reason Americans don’t feel very good about the economy is that is that the vast population of working non-college grads — some two-thirds of Americans — are still bogged down in dead-end jobs lacking any economic security, while struggling with many costs (such as housing, child care, and education) that continue to soar.
In other words, the economy is getting better overall — but overall has become a less and less useful gauge as the rich get richer, the poor grow poorer, and the working middle is under worsening siege.
What do you think?