Things are pretty good! Maybe it’s okay to admit it.
President Donald Trump, with his typical flair for saying things that aren’t true, has proclaimed we’re living through “the greatest economy in our nation’s history.”
It isn’t, but something can in fact be quite good even without being the best ever. The unemployment rate is 3.5 percent. The stock market is at an all-time high. The poverty rate is falling. Employers have started showing refreshing willingness to hire people with criminal records because there just aren’t that many conventionally qualified people left to hire.
That’s good news for American workers, and probably good news for Trump’s reelection campaign. It also poses the question of what exactly Democrats should say about an improving economic situation — they need to find a way to make the case for change, but also to connect with the sentiments being experienced by voters.
At Thursday’s debate, there seemed to be a firm consensus among the candidates that the right path is simply to deny that the economy really is performing all that strongly.
“The wealthy, very wealthy are growing. Ordinary people are not growing,” said former Vice President Joe Biden, probably the least radical candidate in the field. “They are not happy with where they are. And that’s why we must change this presidency now.”
This might work. Certainly Trump massively overstated problems with the economy in 2016 — making up wildly inflated unemployment numbers — and won the election. But legitimately, most indicators really are looking good these days. And that’s not just superficial ones that mask hideous problems beneath the surface.
And more importantly for political purposes, most voters are clearly saying they feel that the economy is doing well. Trying to talk them out of that might be counterproductive compared to the possibility of simply trying to argue about something else.
Democrats take a bleak view of the economy
The Democrats running for president disagree about a lot, but they seemed united in rejecting the premise of moderator Judy Woodruff’s question: “What is your argument to the voter watching this debate tonight who may not like everything President Trump does, but they really like this economy, and they don’t know why they should make a change?”
All the leading Democrats argued that actually the economy is bad:
- Joe Biden: “I don’t think they really do like the economy. Look at the middle class neighborhoods. The middle class is getting killed. The middle class is getting crushed.”
- South Bend, Indiana, Mayor Pete Buttigieg: “This economy is not working for most of us, for the middle class, and I know you’re ever supposed to say middle class and not poor in politics, but we have to talk about poverty in this country.”
- Sen. Elizabeth Warren: “A rising GDP, rise in corporate profits, is not being felt by millions of families across the country.”
- Sen. Bernie Sanders: “Trump goes around saying the economy is doing great. You know what real inflation accounting for wages went up last year? 1.1%. That ain’t great.”
Most of this holds up well if you think of it as a broad account of US economic performance over the past 40 years. GDP has risen a lot over this time period, but thanks largely to growing inequality, the living standards of the typical family have risen by much less than the overall pace of economic growth.
But as a description of the current state of the economy, it’s a very bleak read of data that is honestly looking pretty good — and that most voters say is pretty good.
The economy is doing well
Back in 2007, inflation-adjusted median household income still hadn’t matched its 1999 peak. Then came a recession and a slow recovery that for years created the shocking factoid that the typical family’s living standards had actually fallen over the course of the 21st century.
That, in turn, would be followed by a lot of nerdy debates concerning whether the Census Bureau was really using the right inflation index (a more accurate chained inflation index generally painted a brighter picture of growth) and whether it wouldn’t make sense to include more demographic adjustments (family size fell since 1999 and you also have more retired people now).
Today, though, there is no need for tedious arguments — the typical family’s income is higher today than it’s ever been:
It’s true that, as Sanders said, inflation-adjusted wage growth was not spectacular last year. But it’s also clear if you take a slightly longer view of the data that this is noisy: Short-term movements are dominated by swings in global energy prices, which push short-term inflation up and down in a somewhat random way that has nothing to do with the labor market. Nobody thought 2015 was a spectacular year for economic growth — it was similar to 2014 and 2016 — but there happened to be a big drop in oil prices. And whatever you make of 2019 wage growth, it’s clearly better than what we saw over the previous two years.
Concurrently, it’s just not true that all the growth has been going to record corporate profits. Profits do remain high by historical standards, but as a share of the economy they peaked back in 2012.
And data from the job site Indeed shows that the generally low unemployment rate — plus state minimum wage increases — has been particularly beneficial to people working in low-wage industries, whose earnings have grown the most in percentage terms over the past year:
Current economic growth is not spectacularly rapid. But the main thing is that non-spectacular growth has been the norm since 2011. Back when the economy was recovering from a very severe recession, that non-spectacular growth was a huge disappointment.
But the better the economy gets, the more impressive an additional year of non-spectacular growth seems — with various indicators now routinely setting new records. While the United States remains a highly unequal country, there’s very little evidence that it’s growing more unequal or that recent growth is leaving the middle class behind. And you can see that, subjectively, people feel good about the economy.
Voters express contentment with the economy
In politics, perception is reality. And it’s certainly possible to have a ton of great statistics that somehow or other fail to capture what really matters to people.
But a CNN poll released Friday says that 76 percent of the public says economic conditions are either “somewhat good” or “very good.” That’s lower than the numbers posted in the halcyon days of the dot-com boom, but it’s the most positive reading CNN has found since February 2001. And other subjective economic assessments seem to agree — things are good!
- The Bloomberg Consumer Comfort Index shows a high degree of optimism about the economic future.
- Gallup finds that 65 percent of the public says that it is a good time to find a quality job, and 55 percent of the public rates economic conditions as either good or excellent.
- 56 percent of Americans rate their personal financial situation as good or excellent, 66 percent say they have enough wealth and income to live comfortably, and 57 percent say their personal financial situation is improving.
In my experience, economic sentiment among young people working in digital media is considerably bleaker than what you see in these polls. That, in turn, can tend to create a bit of a dark conventional wisdom about economic conditions nationwide.
But it’s important to remember that the digital media industry has been specifically struggling — with lots of layoffs and contractions — at a time when overall employment has been growing steadily. Digital media jobs are heavily concentrated in New York City, which is an unusually expensive (and increasingly so) housing market with a secondary employment hub in also-expensive Washington, DC.
The economy is not without its problems. For starters, the 33 percent of the public that says it is struggling to get by represents tens of millions of people even if it’s a minority of the population. But on the whole, most of the hard economic data looks good, and most people have a fairly upbeat assessment of the economy. And it’s not clear that trying to talk Americans out of their optimism is the smart strategy.
The message matters
It’s worth saying that the economy was doing fairly well in 2018 and that didn’t stop Republicans from getting creamed.
While economic conditions are important to understanding politics, it’s not clear that they give us much additional information over and above what you see in opinion polling. Trump would probably be less popular if the economy were doing worse and more popular if it were doing better, but he’s just not very popular even though the economy is doing well. Various other aspects of his personal behavior doubtless explain that in part, but one big driver is polarization.
We have several historical examples — 1972, 1984, 1996 — of incumbents riding a strong economy to huge landslide reelections, but it’s simply hard to imagine that happening under contemporary political conditions. People who think climate change is real, abortion should be legal, guns should be strictly regulated, and the minimum wage should rise aren’t going to suddenly vote for Trump, no matter what happens.
But just because the economy isn’t an insuperable obstacle for Democrats doesn’t mean they should try to argue that the economy is bad.
Lynn Vavreck, the UCLA political scientist, wrote a book, The Message Matters: The Economy and Presidential Campaigns, that takes a detailed, statistically-informed look at the interplay between economic conditions and presidential elections. She finds that while opposition party candidates running amid economic growth are definitely running uphill, there are examples — she cites 1960, 1968, 1976, and 2000 as the key cases — of winning that way.
The key in all four cases, however, isn’t that the winners persuaded people the economy was actually bad. It’s that the winners persuaded people other issues — the missile gap, “law and order,” honesty in government, “honor and dignity” — were more important.
To an extent this is easier said than done.
Trump in some ways makes for an easy case. He engages in all kinds of antics and corruption that dominate the headlines, while he refuses to make even token gestures to address social concerns like pollution, health care, or college affordability.
And most of all, while the economy has done fine under his stewardship, the growth is clearly continuous with that under Obama. It should be possible to acknowledge that real progress has been made without conceding that Trump personally is responsible for it, and then pivot to accusing him of ignoring the wide range of issues that can’t be solved simply by a low unemployment rate.
But insisting that the middle class is drowning in misery while it keeps telling pollsters that’s not the case seems like a gift to Trump. An extended national argument that focuses on the economy is good news for an incumbent presiding over growth. When Democrats insist that down is up, they risk looking like they might upset the apple cart at a time when voters are actually quite satisfied.
Author: Matthew Yglesias