Presents from Uncle Joe to Zelensky are also stopping. It's time to wake up and smell the coffee.
"As Joe Biden's approval ratings sink deeper into the mire, Democrats and their allies in the media are puzzled and dispirited by the ingratitude of the American people. Here he is, the kindly old man who came out of retirement to save American democracy, cool a burning planet, restore faith in the nation's global leadership, abolish prejudice, end poverty, and allow us the freedom to choose our own pronouns, and what thanks does he get? Three quarters of Americans say he shouldn't run again.
It's almost enough to make you want to chuck it all in and make some serious money shaking down foreign governments and companies with members of your family.
The left's frustration with the inconvenient views of the masses has long been a burden for them. But one thing in particular is currently amplifying their lament: Why are Americans so unhappy with the economy when everything is going so well?
Look, they say, unemployment is low, inflation is falling, real incomes are rising. That recession the doomsayers have been predicting for a year or more isn't in sight. Growth in the current quarter is roaring along at an annual rate of nearly 5%. The Federal Reserve is almost done raising interest rates. The housing market hasn't collapsed. Everything is rosy.
Yet according to a Quinnipiac University poll last week, in line with all recent surveys, 60% of voters disapprove of Mr. Biden's handling of the economy; 35% approve.
Paul Krugman, who once conducted Nobel Prize-winning scholarship on subjects like international trade but now mainly ventilates partisan hackery for the New York Times, has been hot on this topic. Noting that surveys of personal finances also suggest Americans are generally content with their own condition but don't like the state of the general economy, he blames right-wing media for telling credulous people stuff that isn't true: "We're living in a world in which what people believe may have little to do with facts, including the facts of their own lives."
Others, in a slightly less partisan way, have noodled over the apparent disconnect between the direction of headline economic indicators and public sentiment about the economy. The Economist, developing work first published on Twitter by an anonymous user called quantian, notes a sharp break in recent years in a longstanding relationship between consumer-confidence measures and a basket of actual economic data. From 1980 to 2020 the regularly published University of Michigan consumer-confidence index closely tracked that basket. But since 2020, confidence has plummeted even as most of those variables have actually remained relatively robust.
So what's going on? Quantian refits the model to isolate the different variables and find out what's causing the gloom and says that interest rates are the key -- the 5-point increase in the federal-funds rate in the past 18 months, and its consequences, has overwhelmed all other factors in the eyes of Americans: "The clear-cut, data-backed . . . reason Biden is unpopular is because Jerome Powell is making people's mortgage rates go up."
Perhaps, but I'd suggest there's an even more obvious way of looking at the same thing. To adapt a famous presidential campaign slogan, it's the inflation, stupid.
The time frame of the Michigan tracking model is a giveaway. Between 1983 and 2020, and especially after 1991, inflation was tame, so the weight it was given was suitably small. But in the past two years it has surged -- back to the top of public consciousness. The outsize impact on Americans' confidence in the economy is no great mystery.
Rapidly rising prices have had two deleterious effects on economic sentiment. First, they have cut spending power. Between the second quarter of 2020 and the second quarter of 2023, real median weekly wages fell by 7%. A slight rise this year hasn't come close to making up for the fall since 2020.
But inflation also has potentially even more damaging effects. Americans under 50 have no real recollection of the terrifying, destabilizing quality of sustained sharply rising prices. When you read headlines about a United Auto Workers strike in pursuit of a 36% pay demand over four years, it's a flashback to that era. An out-of-control pay-and-price spiral is a demoralizing assault on our already fragile sense of economic security.
Despite claims from the Democrats, inflation is nowhere near defeated. It may be down from its peak of a year ago, but the core consumer price index, excluding food and energy, was well above 4% in August.
For Democratic partisans, the message is: The beatings will continue until morale improves. For the rest of us, as long as inflation remains way above its levels of the past 30 years, low public confidence is no puzzle but a wholly rational, necessary response." [1]
1. Free Expression: Inflation Will Continue Until Morale Improves. Baker, Gerard.
Wall Street Journal, Eastern edition; New York, N.Y.. 19 Sep 2023: A.17.
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