Is the economy booming or in recession?
It depends on who you ask.
Official data is good, economic growth is solid, the job market is thriving, and stock prices continue to hit record highs.
But many Americans believe the economy is getting worse.
The latest gloomy indicator is a Guardian-Harris poll, which found that 55% of respondents believe the economy is shrinking and 56% believe we are in the midst of a recession.
Inflation-adjusted economic output grew at a solid 3% over the trailing 12 months. The unemployment rate is 3.9%. And the U.S. economy is on track to add more than 3.5 million jobs in 2023.
As long as the economy is growing and employers continue to hire at this rate, a recession is essentially impossible. But this Harris Poll is not a one-off.
A key indicator of small business confidence is nearing recession levels, as are some consumer confidence surveys. President Biden's approval rating has also plummeted, suggesting that many Americans believe what they perceive as a poor economy is linked to his performance as president.
The Guardian-Harris poll also found that 49% of respondents believe the S&P 500 will fall this year. In reality, stocks have been surging, with the S&P 500 up 13% this year after rising 24% last year.
Something seems odd about a Guardian-Harris poll that found half of Americans think the stock market is falling. In another poll, Gallup found that 62% of Americans own stocks, primarily through retirement or investment accounts. If that's true, surely most or all of those people know that their portfolios are rising in value?
The Guardian-Harris Poll doesn't say how many of its respondents own stocks, but the two surveys seem to contradict each other: people know how much money they have, and stock market investors are underestimated in the Harris Poll and overestimated in the Gallup poll.
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Statistical anomalies probably explain part of why polls show people are so pessimistic when the economy is doing pretty well, but it would be a mistake to think that this is simply a matter of measurement — or, worse, that many people are too stupid to realize how good a deal they are.
Perhaps Biden's biggest challenge as he seeks a second term will be convincing Americans that the economy is working for them, without coming across as condescending or dismissive.
Inflation has clearly been one of the big economic issues over the past three years.
Janna Herron of Yahoo Finance recently explained that consumers believe the optimal level of inflation is essentially zero, well below the Federal Reserve's 2% target.
If zero inflation is ideal for most people, then it came as a shock to see inflation peak at 9% in June 2022. If you would prefer prices never to rise, even the current rate of 3.4% is too high.
There is plenty of other evidence that Americans continue to feel the pain of ever-rising prices, even if the annual rate of change has now moderated.
Another challenge for Biden is that many Americans are likely comparing the current U.S. economy to that of 2019, when inflation is worse, gas prices are rising and there are unsettling wars in Europe and the Middle East.
But compared to the rest of the world, the U.S. economy is great. No economy has emerged from the COVID pandemic stronger than the U.S. economy. Inflation, driven largely by COVID-related supply chain disruptions, has risen nearly everywhere and fallen more quickly in the U.S. than most other places. But telling voters that things could get much worse is rarely a persuasive message.
It is also unreasonable to compare Biden's economy to that of his predecessor, Donald Trump, who is running for the White House again this year.
If Biden had been president instead of Trump, the economy would likely have looked roughly the same from 2017 to 2021. If Trump had been president instead of Biden, the last three years would have been the same, too.
The factors that have transformed the US economy over the past few years will be more influential than anything Trump or Biden have done.
While Trump enjoyed a favorable economic environment — and, crucially, U.S. shale energy companies were competing for market share with Middle Eastern oil drillers, leading to overproduction and lower gasoline prices for consumers — he also faced the coronavirus pandemic and a frenzy of lockdowns and business closures in 2020.
Biden takes office at a time when the COVID-19 vaccine rollout is progressing and the economy is slowly returning to normal, but the disruptions caused by the virus have sparked inflation that has become a thorn in Biden's administration.
Russia's invasion of Ukraine in 2022 sent energy prices soaring just as OPEC+ countries were cutting production and U.S. drillers were prioritizing profitability over market share. All of this drove up energy prices, a big factor in higher inflation in 2022 that still casts a shadow over Biden's economic record.
Another thing that may be disappointing to people is the end of the COVID stimulus package.
In an annual survey conducted by the Federal Reserve, Americans reported that the economy was at its healthiest in 2021, when the economy was still regaining ground lost in the pandemic-related downturn. The economy recovered gradually in 2022 and 2023, but Americans said their financial situation worsened in each of those years as prices rose.
A peak of $6 trillion worth of COVID-related stimulus checks for consumers and businesses came in 2021. As these programs ended, the “excess savings” that had built up while people were stuck at home receiving stimulus checks dried up and were nearly gone by the end of 2023.
So if Americans are comparing today's economy to the economy three years ago, when the government was pumping helicopter money into the economy, it's a bit tougher, to be sure.
So, do all those endless surveys asking people what they think about the economy really matter? Maybe not if Biden is re-elected in November.
But if voters reject Biden, it will be clear that they have been expressing dissatisfaction for quite some time, even if the data doesn't entirely bear it out.
Rick Newman is Yahoo FinanceFollow us on Twitter Follow.
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