According to most economists, the U.S. economy concluded 2023 on a favorable trajectory. There has been an increase in growth, strong job figures, and a three-year low in inflation.
According to Selcuk Eren, a senior economist at The Conference Board, the current performance has been positive as the GDP has been increasing and there has not been a predicted recession. Additionally, unemployment has remained below 4% for 23 consecutive months, setting a new record.
Although the statistics are strong, a majority of Americans (68%) believe that the state of the economy is declining. This was revealed in a Gallup poll conducted in December 2023, where four out of five adults in the U.S. rated the present economic conditions as either “poor” (45%) or “fair” (33%). Only 19% of those surveyed deemed the economy to be “good,” despite the positive economic indicators.
Eren suggests that the surveys we rely on to gauge the economic impact may not reflect the reality for real individuals who are more focused on their personal expenses such as groceries and rent. Inflation has a universal and negative effect on everyone.
On January 19, 2024, milk was shown on shelves at a Whole Foods supermarket in New York City.
In a survey conducted in January 2024, it was discovered that 90% of Republicans, 74% of independents, and 49% of Democrats believe that the state of the economy is not favorable. The results also show that only 31% of individuals approve of Biden’s approach to managing the economy, while 56% do not approve.
Nevertheless, Justin Wolfers, an economics and public policy professor at the University of Michigan, doubts the reliability of polls and argues that individuals’ behavior suggests confidence in the current state of the economy.
Can we determine the level of optimism among American consumers? According to Wolfers, the initial step would be to examine their spending habits. If they were anticipating a downturn in the economy, they would save money. However, it appears that people are spending as if they not only believe the economy is currently strong, but also that it will remain so.
People’s political beliefs may influence their responses to economic inquiries.
Greg Ip, the chief economics commentator at The Wall Street Journal, suggests that the current polling is contradictory because people are basing their opinions about the economy on their feelings towards the president.
A customer is looking at televisions at a Best Buy store in Charlotte, North Carolina on November 24, 2023.
Ip and Wolfer were featured speakers at a recent virtual conference arranged by the Brookings Institution and moderated by CNBC anchor Sara Eisen.
Eisen stated that in conversations with influential individuals such as major investors and CEOs, they do not attribute the success of the economy to Biden. They believe that the economy is thriving in spite of his policies, which are viewed as mostly liberal. These policies include plans to increase taxes, both personal and corporate, as well as eliminating oil production in the country, all of which are perceived as detrimental to the economy.
Selcuk believes that both Biden and Trump implemented policies that had a positive impact on the economy. In 2022, Biden introduced the Inflation Reduction Act, which aimed to decrease inflation by decreasing the government’s budget deficit. Additionally, measures such as extended unemployment benefits, one-time tax credits, and direct payments to households aided in maintaining economic growth during the COVID-19 pandemic despite significant job losses.
He states that the recovery from the significant decrease in employment due to the pandemic was swift. Without government intervention, it is possible that the jobs would not have been regained as quickly, resulting in a prolonged period of high unemployment. This situation has brought about many benefits, some of which were initiated in the previous administration and have carried over into the present.
On January 19, 2024, a Mobil gas station in New York displayed the prices on their pump.
One possible explanation for people’s negative sentiments towards the economy could be the expiration of certain pandemic-related benefits.
Selcuk stated that for nearly four years, there were no payments required for student loans. However, now there is a gradual return to making payments, which will have a negative impact on individuals. He also mentioned that when something is taken away after having it for a period of time, even if it was only temporary, it can result in negative emotions.
However, there are indications that Americans are beginning to have a more positive perception of inflation. In 2022, inflation reached its highest level in 40 years, but it has since decreased to approximately 3%, the lowest it has been in three years.
In a survey conducted in January 2024, it was discovered that consumers are becoming more confident that inflation is improving. This increase in positive consumer sentiment is the highest it has been since 2021, indicating that the difference between consumer perception and that of economic experts is beginning to decrease.
Source: voanews.com
