Most Americans mistakenly believe the US is in recession – and most blame Biden

Nearly three in five Americans mistakenly believe the US is in an economic recession, and most blame the Biden administration, according to a Harris poll conducted exclusively for the Guardian. The survey found continued pessimism about the economy as Election Day nears.

The survey highlighted many misconceptions people have about the economy, including:

  • 55% believe the economy is shrinking and 56% think the US is experiencing a recession, even though the broadest measure of the economy, gross domestic product (GDP), has been growing.

  • 49% believe the S&P 500 stock market index is down for the year, although the index rose about 24% in 2023 and is up more than 12% this year.

  • 49% believe unemployment is at a 50-year high, although the jobless rate has been below 4%, a near 50-year low.

Many Americans blame Biden for the state of the economy, with 58% of respondents saying the economy is getting worse because of mismanagement by the presidential administration.

The survey highlighted people’s mixed emotions about inflation. The vast majority of respondents, 72%, indicated that they think inflation is increasing. In reality, the inflation rate has fallen sharply from its post-Covid peak of 9.1% and has fluctuated between 3% and 4% annually.

In April, the inflation rate fell from 3.5% to 3.4% — far from the 40-year inflation peak of 9.1% in June 2022 — sparking a stock market rally that pushed the Dow Jones to a record high.

A recession is generally defined by a decline in economic activity, usually measured as gross domestic product (GDP), over two consecutive quarters, although in the US the National Bureau of Economic Research (NEBR) has the final say. US GDP has grown over the past few years, barring a brief contraction in 2022, which NEBR did not consider a recession.

The three bar graphs representing Republicans, Independents, and Democrats all have widths greater than 49%. Below is a gray line graph representing GDP per capita trending upward after the recession subsided.

The only recent recession was in 2020, at the start of the Covid-19 pandemic. Since then, the US economy has grown significantly. Unemployment has also hit historic lows, wages have risen and consumer spending has been strong.

But the road to recovery has been difficult, largely because of inflation and the Federal Reserve raising interest rates to reduce high prices.

The three bar graphs representing Republicans, Independents, and Democrats all have widths greater than 61%. Below is a gray line graph representing monthly inflation, which starts out flat, skyrockets to 9.1%, and then settles in a range of 3-4%.

Despite earlier suggestions that the Fed may start cutting rates this year, Fed officials have recently indicated that interest rates will remain high for the foreseeable future. While inflation has eased significantly since its peak in 2022, officials continue to say that inflation remains high because it remains above the Fed’s target of 2% per year.

A gray line graph representing US jobs. It falls during three recessions, most drastically during the 2020 pandemic. Since then, it has corrected back up to its previous trajectory.

After a tumultuous ride of inflation and high interest rates, voters are uncertain about what will happen next. Consumer confidence fell to a six-month low in May.

So even though economic data, such as GDP, signify strength in the economy, there is a stubborn gap between the reality represented in that data—what economists use to gauge the health of the economy—and the emotional reality that underlies how Americans feel about the economy. In the poll, 55% think the economy is getting worse.

Some have called the phenomenon a “vibecession,” a term first coined by economics writer Kyla Scanlon to describe widespread pessimism about the economy that defies statistics showing the economy is actually doing well.

While inflation has fallen, prices are at a higher level compared to just a few years ago. And prices are still rising, just at a slower rate than at the peak of inflation.

Americans are clearly still reeling from rising prices. In the survey, 70% of Americans said their biggest economic concern was the cost of living. Almost the same percentage of people, 68%, said inflation was top of mind.

The survey showed little change in Americans’ economic outlook from a Harris Poll conducted for the Guardian on the economy in September 2023.

A similar percentage of respondents agreed that “it’s hard to be happy about positive economic news when I feel financially strapped every month” and that the economy was worse than the media predicted.

Another thing that hasn’t changed: views on the economy depend largely on which political party people belong to. Republicans were more likely to report feeling bad about the economy than Democrats. The vast majority of Republicans believe the economy is shrinking, inflation is rising, and the economy is generally getting worse. A sizable but smaller percentage of Democrats, less than 40%, believed the same.

Surprisingly, more Republicans than Democrats believe the economy is getting worse because of the Biden administration’s mismanagement.

One thing both Republicans and Democrats agree on: They don’t know who to trust when it comes to learning about the economy. In both September and May, most respondents — more than 60% showed skepticism about economic news.

The economy continues to pose a major challenge for Joe Biden in his re-election bid. Although he has tried to tout “Bidenomics,” or his domestic economic record, including his $1.2 trillion infrastructure bill through 2022, 70% of Republicans and 39% of Democrats seem to think he’s making the economy worse .

But it’s not all bad news for Biden. Republican voters were slightly more optimistic about the lasting effects of “Bidenomics” than they were in Harris’ September poll. Four in 10 Republicans, up 11 percentage points from September, indicated they believe Bidenomics will have a lasting positive impact, while 81% of Democrats said the same. And three-quarters of all respondents said they support at least one of Bidenomics’ key pillars, which include infrastructure investment, high-tech electronics manufacturing, clean energy facilities and more union jobs.

However, even with these small threads of approval, pessimism about the overall economy is widespread. It will be an uphill battle for Biden to convince voters to be more hopeful.

“What Americans are saying in this data is, ‘Economists may say things are getting better, but we’re not feeling it where I live,'” said John Gerzema, CEO of Harris Poll. it takes time. Leaders must understand this and bring the public with them.â€

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Image Source : www.theguardian.com

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