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If you’re like most Americans, you think everything is terrible — and you leave pollsters and economists to come up with new theories to explain why you’re so depressed.
For much of Joe Biden’s presidency, consumer attitudes have been dismal. Inflation seemed like a good explanation. In June 2022, it reached 8.9%, the highest level in 40 years. At one point, rent and food costs rose to two to three times their income. This pushed the University of Michigan’s sentiment index to an all-time low in 2022.
Inflation has returned to normal levels and some goods are actually becoming cheaper. Job growth remains strong, the economy is growing, and stock prices are rising. In normal times, that should coincide with a rapid improvement in confidence and a rise in optimism.
But that doesn’t seem to be happening. Michigan’s sentiment index rose slightly, but remains close to the low levels of late 1981, when inflation was near 10% and the economy was in a recession. Consumers are now emerging from the Great Recession and are about as disappointed as they were in 2009, when the unemployment rate was approaching 10%.
Pervasive darkness seems to be a new characteristic of America. Seventy-three percent of respondents to the NBC News poll said the U.S. is heading in the wrong direction, the highest percentage since the poll began in 1989. A similar Gallup poll found that Americans’ satisfaction with the country’s direction has been in a long-term decline, from a peak of 71% in 1999 to just 22% today.
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Mr. Biden feels this most acutely, as his approval ratings fell in 2022 as inflation worsened and have never recovered. Biden’s approval rating of 39% is the lowest of any president running for a second term a year after Election Day, which is clearly tough news for his re-election odds.
As voters’ attitudes seem to diverge from economic conditions, experts are trying to come up with new explanations for why everyone is so unhappy. Here are some of them:
Select your problem. Although inflation rates have fallen, food, rent, and transportation costs are still rising compared to pre-COVID-19 levels in 2019. Affordable housing is a particular problem in some areas. Therefore, Americans vulnerable to these budget killers are likely to remain highly pessimistic even as overall inflation declines.
Still, that doesn’t seem to explain how widespread the anxiety is. For example, millions of homeowners were able to lock in very low interest rate mortgages several years ago, resulting in significant savings that offset other types of inflation. Even if these people enjoy saving, it doesn’t show up in confidence surveys.
Debbie Downers Everywhere. Some researchers believe that the overall tone of the news people hear is becoming more negative, and attitudes in general are becoming more sour. “Economic news has become more negative overall since 2018, and that negative bias has increased over the past three years,” two Brookings Institution economists said in a recent study. Moody’s Analytics reached a similar conclusion in its 2023 study, linking more negative news to the explosion of digital information sources over the past decade. Even in the best of circumstances, some point to a gray-area “inhuman industry” whose purpose is to infuriate people and foster polarization.
“referred pain” This theory comes from Greg Yip of the Wall Street Journal, who says that Americans who are witnessing the tragedies of mass shootings, immigration disruption, overdose deaths, and wars overseas simply believe that all I’m guessing that he has some bad feelings towards him. So when pollsters ask people what they think about the economy, they get negative responses. Because people have overwhelmingly negative emotions. If this is true, voters may actually be more optimistic about the Biden economy than the poll numbers indicate.
political fatalism. The New York Times’ Paul Krugman argues that when Republicans lose power to Democrats, as they did when Joe Biden ousted Donald Trump from office in 2021, the Republican Party’s view of the nation’s well-being is subject to dramatic changes. It has been pointed out that there is a tendency for a reversal. The bleakest outlook for the economy and the nation. Democrats’ views also change when their party gains or loses power, but not by much. Krugman posits that Trump supporters who believe the lie that Biden stole the 2020 election are apocalyptic and distort the outlook for the entire country, which is honestly a bit of a stretch. It seems that there is.
Either way, a recurring theme has emerged that something other than economic fundamentals is plaguing the country and sapping its optimism. This could be good news for Biden if his economic performance is not as much of a liability as traditional metrics suggest. But it would also mean that Mr. Biden, who considers himself a sunny man, will be unable to muster the energy to pull America out of its deep funk.
The question is, can anyone do it?
Rick Newman is a senior columnist in the United States. Yahoo Finance. Follow him on Twitter @rickjnewman.
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