When the Economy Itself is Political
Hello, I hope that you had a wonderful Thanksgiving holiday! Evelyn and I spent it with family and friends eating turkey and pumpkin pie.
This week on the Forward Podcast I sit down with one of my favorite journalists, Derek Thompson who writes about economics and technology for the Atlantic. He also has a brand new podcast called “Plain English.”
I asked Derek a simple question: “What is going on with the economy?” We discuss the growth numbers, people leaving their jobs/the Great Resignation, remote work, inflation and much more.
One turn of the conversation in particular troubled me and blew my mind: the recent Michigan consumer confidence survey showed an extreme difference between the way Democrats and Republicans think the economy is faring. The latest reading for November had Democrats at 88.4 and Republicans at 37.8, a record difference of 49 points (D+49). Independents were at 70. Derek noted that there has never been this big a gap in terms of the way people perceived the economy based on their party affiliation.
Now, you could argue that maybe people in blue areas on the coasts are genuinely experiencing different/better economic conditions than people in redder areas. But the gap in perceptions was the opposite in October 2019, with Republicans at 119, Democrats at 71.6 and Independents at 100 (R+47). You’ll recall that Trump was the President then.
Yes, Democrats are 49 points more optimistic now, and Republicans were 47 points more optimistic last Fall, with each swing the biggest on record. Apparently, how we feel about the people in charge determines how we feel the economy is faring.
If you turn on Fox News right now, you’ll see relentless blaring about skyrocketing inflation and economic distress. On the other side you’ll see very different coverage. The Democrats are often talking down inflation while the Republicans treat it as unprecedented.
As usual, as Derek points out, the reality is somewhere in the middle. Inflation is real and serious and painful, but not as apocalyptic or unprecedented as it’s being made out to be in some circles.
It should be emphasized that the gaps in party perception of the economy being this big is unprecedented. For example, as recently as 2016 the gap was less than half its current level over 5 surveys (D+21).
Michael Grunwald wrote in Politico in 2020: “There is a line of thinking that America has entered a kind of postmodern political era where the appearance of governing is just as politically powerful as actual governing, because most Americans now live in partisan spin bubbles that insulate them from facts on the ground.” Passing laws, solving problems, and measuring impacts don’t matter as much as arguing for your version of reality with aligned media outlets reinforcing your preferred narrative.
I know, this is dark stuff. Our country is getting so unmoored that there are two distinct versions of reality that determine people’s perceptions of day-to-day economic conditions. We imagine that the two parties will wage a contest based on policies and how we are doing. Instead, the argument itself is replacing governance.
What does this mean? First, we should acknowledge the situation that we’re in; we are in a time when people’s feelings about who is in charge are now so strong that they override other inputs.
Second, there is a need to amend our media landscape so that there is some type of objective reality that can be used as a starting point. Today, it’s a lot to expect all Americans to be on the same page. But if a critical mass of people can agree on certain facts in a polarized country, they can be the swing group.
Last, if you want to know how the economy is doing, apparently you should ask an Independent.
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